Home > Uncategorized > If You Have a Student Loan, You Just Lost Your Watchdog

If You Have a Student Loan, You Just Lost Your Watchdog

May 11, 2018

I heard a report yesterday morning on NPR that the new acting head of the Consumer Financial Protection Bureau was shutting down the student loan office of that agency, an agency that intervened on loans to unwitting veterans and first generation college students who entered into agreements that left them close to or in bankruptcy. This AP story describes the rationale for the change, which will clearly benefit only those schools  and affiliated lending agencies that offer the loans to the detriment of students who took them on. How much did the student loan office claw back from fraudulent schools and loaners?

The student loan office at the CFPB had been responsible for returning $750 million in relief.

As the story reports, most of that came from aggressive regulatory action taken on behalf of students who were bilked by Corinthian College and “…the troubled student lender Navient“. In a nation that pays lip service to the importance of a higher education and fair play, it is sad to see needed regulatory oversight reduced in the name of free enterprise. As the article indicates, tens of thousands of individuals are impacted by student loans, individuals whose spending and ability to receive credit is curtailed or imperiled:

Roughly 4.6 million Americans are in default on their student loans as of December 31, 2017, according to the Department of Education, more than double what it was four years ago. That’s more than 10 percent of the total 42.8 million Americans who currently have a student loan outstanding backed by the Department of Education.

Consumer advocates immediately denounced the change, saying the CFPB should be conducting tough oversight of the student loan industry, given its size and number of borrowers impacted, particularly young people.

“Education alone cannot stop predatory behaviors on the part of for-profit schools and servicers, nor can it help hundreds of thousands of Americans in serious debt because of these practices,” said Whitney Barkley-Denney, senior policy counsel with the Center for Responsible Lending.

Good government oversight could stop the predatory behaviors through regulation… but only if the agencies responsible for enforcement are funded. Alas, in the current administration the funds that could help underwrite the enforcement are being redirected to the profiteers.

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