Group to take on student loan industry
A consumer group, led by people who quit the Trump administration, is forming in hopes of serving as a check on the student loan industry.
The nonprofit Student Borrower Protection Center aims to expand borrower protections and oversight of the $1.5 trillion student loan market.
Its executive director is Seth Frotman, who resigned in August from a senior position at the federal Consumer Financial Protection Bureau. When he stepped down, Frotman asserted that the Trump administration was siding with predatory lenders over consumers and enacting policies that will lead to “far-reaching harm.” Two others from his office also quit in protest and are joining Frotman at the new venture, along with three fellows.
The new center plans to encourage states and cities to step up enforcement actions against loan-servicing companies, debt collectors, for-profit schools and private student lenders.
“One of the reasons why we are in the midst of a student debt crisis is for years, too many have looked to Washington to solve this problem,” Frotman said. “I think the lessons of the last decade is that Washington has not and will not solve it.”
The center has funding from the Sandler Foundation, which traditionally supports liberal causes, and expects to receive contributions from at least one other foundation, Frotman said.
The group also plans to do advocacy work in states considering legislation that steps up oversight of student loan servicers and other parts of the industry, and lobby for a borrower bill of rights in California. It announced a partnership with the University of California at Irvine School of Law to produce research and analysis.
Frotman worked at the federal consumer protection agency for 7 1⁄2 years. His final position there was agency ombudsman and assistant director in the Office for Students & Student Loan. Before that, he was an aide on Capitol Hill.