A top student loan official who resigned from the Consumer Finance Protection Bureau (CFPB) last year delivered a scathing rebuke against the Trump administration to the House on Thursday.
“The last 15 months at the bureau have been plagued with inaction and incompetence,” former CFPB student loan ombudsman Seth Frotman told the Committee on Financial Services on Capitol Hill. “All under the guise of some supposed ideology. They have prioritized the wishes of the most powerful companies in America over the needs of the very people they were tasked by Congress to protect.”
Frotman emphasized the student loan issue further in his written testimony, highlighting that the “trillion-dollar black hole in our financial market,” has left people “drowning under the weight of this unprecedented burden.”
He added that “the student debt crisis is more than a higher education policy issue. It is a significant — perhaps the most significant — consumer finance issue threatening our nation at this time.”
Student loan borrowers struggling to pay back
Borrowers are finding it increasingly difficult to pay back their loans based on a new survey by Student Loan Hero and LendingTree.
Out of 1,000 borrowers who responded, almost half are struggling — with Gen X (born between 1965 and 1980) reporting the highest levels of difficulty at nearly 60%. In addition, one in five borrowers don’t know how to change their payment plans.
Mulvaney set out to ‘basically destroy and undermine the CFPB’
Frotman’s blistering criticism of the CFPB began in 2018 when he resigned from the agency, accusing then-director Mick Mulvaney’s leadership of having “abandoned the very consumers it is tasked by Congress with protecting.”
The committee’s chair Rep. Maxine Waters (D-Calif.) also chastised Mulvaney on Wednesday for introducing “harmful structural changes … made to damage the agency one by one,” and that he was brought in by the Trump administration to “basically destroy and undermine the CFPB.”
On Thursday, Frotman stressed the same.
Responding to a question by Rep. Alexandria Ocasio-Cortez (D-New York) on whether any political interests are at play here, he responded: “The steps that Mick Mulvaney and Kathy Kraninger are pretty indefensible across the board. ...
“The fundamental issue is that the bureau has become a political arm of the Department of Education.”
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.