Student loan exec handed job as watchdog

The Consumer Financial Protection Bureau’s new student loan watchdog is a former executive from a loan servicer that has repeatedly come under fire from government auditors — and even the consumer bureau itself — for a trail of serious mistakes.

The agency named Robert G. Cameron, previously a top compliance official at the Pennsylvania Higher Education Assistance Agency, as the bureau’s new ombudsman on Friday.

The ombudsman’s office is responsible for helping borrowers resolve issues with their lenders. Since the bureau’s creation, it has been the government’s loudest voice on monitoring problems in the $1.6 trillion student debt market.

Most borrowers have federal loans, but the bureau said Cameron would focus on private student loans, which make up about 8% of the loans outstanding. The law that created the position specifically referred to the role as a “private education loan ombudsman,” and under President Donald Trump, the consumer bureau has made a point of interpreting its statutory powers literally.

Primary supervision of federal student loans rests with the Education Department, which has its own ombudsman, Joyce Demoss.

PHEAA is one of a handful of servicers paid by the Education Department to handle the government’s $1.5 trillion portfolio of federal loans and collect payments from nearly 43 million borrowers. Its Fedloan unit is the only servicer that works with borrowers in the Public Service Loan Forgiveness program, which has drawn widespread criticism for its complexity and its monthslong backlog for addressing errors. PHEAA services private loans under its American Education Services unit.

“Only the Trump administration would think a loan servicing industry insider is the best person to look out for the interests of America’s student borrowers,” said Derek Martin, the director of Allied Progress, a consumer advocacy group.

Agency representatives did not respond to questions about Cameron’s background.

Cameron fills a post that had been left vacant since the agency’s previous ombudsman, Seth Frotman, quit a year ago with a scathing letter that accused the bureau’s leadership of favoring large companies over consumers. Frotman, who left to start an advocacy group called the Student Borrower Protection Center, said Cameron’s appointment was “outrageous,” given PHEAA’S history.

A recent audit by the Education Department’s inspector general found deeper problems at PHEAA than at any other large servicer, and a 2017 report from the consumer bureau criticized the public service loan program’s shoddy execution. Borrowers have filed more than 9,000 complaints with the consumer bureau about the servicer.