Student loan borrowers need an advocate

Recently, the student loan ombudsman at the federal Consumer Financial Protection Bureau submitted a blistering letter of resignation.

Seth Frotman argued the bureau “has turned its back on young people and their financial futures,” abandoning “the very consumers it is tasked by Congress with protecting.”

Part of the bureau’s work goes to ensuring that students who borrow for their education are not cheated or otherwise abused by lenders and loan servicing firms . ...

Student loans largely work through the federal government lending directly to borrowers. The Education Department hires private companies, or loan servicers, to manage the loans. In January 2017, the Consumer Financial Protection Bureau sued Navient, the country’s leading servicer of federal and private student loans, charging that the company cheated borrowers on their repayment rights.

The Education Department subsequently announced that it would cease sharing its student loan data with the bureau. It contends the bureau has become “overreaching and unaccountable.” Actually, what the department has done is put loan servicers beyond the reach of the bureau. Without the data, the bureau cannot perform its job . ...

Recall why the bureau was created in the aftermath of the Wall Street calamity that deepened the Great Recession, the record replete with stories of lenders scamming consumers. Bankers and others in the financial industry have their squads of lobbyists and political action committees. The reasonable notion is: Establish an advocate on the side of consumers.

Read the full editorial from the Akron Beacon Journal at bit.ly/2MH07BT