Seth Frotman, the top government official who oversees $1.5 trillion in student loans, resigned on Monday claiming the White House is “openly hostile” toward protecting student loan borrowers.
The Associated Press reports that he will be leaving his position as student loan ombudsman at the end of this week, a position he has held since 2016.
Mick Mulvaney is President Trump’s budget director and has also been acting as director of the bureau since late November. Since that time, the bureau has scaled back enforcement work and proposed rescinding many regulations that were put into place under the Obama administration. Mulvaney downgraded the mission of Frotman’s student loan office and move it under consumer education instead of enforcement.
According to NPR, in his resignation letter, which was addressed to Mick Mulvaney, Frotman says that current leadership “has turned its back on young people and their financial futures.” The letter accuses the Trump administration of undermining the CFPB and interfering in its ability to protect student borrowers.
“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Seth Frotman has served as Student Loan Ombudsmen for the last three years. The position was created by Congress in the wake of the financial crisis as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Part of Frotman’s duties included reviewing thousands of complaints from student loan borrowers and investigating questionable practices of loan services, private lenders, and debt collectors.
The position Frotman held is very powerful. It involves working with the bureau’s enforcement staff to target predatory behavior in the student loan market.
Since 2011, the CFPB handled over 60,000 student loan complaints and returned $750 million to harmed student loan borrowers. It also played an important role in lawsuits against for-profit giants like ITT Tech.
But over the last year, the U.S. Department of Education announced it would no longer share information with the CFPB about the oversight of federal student loans, claiming that the CFBP’s actions were “overreaching and unaccountable” and that they confused borrowers and lenders alike.
The letter also said, “The damage you have done to the Bureau betrays these families and sacrifices the financial futures of millions of Americans in communities across the country.” He also accuses the CFPB of hiding evidence that many of the nation’s largest banks were saddling students with legally dubious account fees.