Mulvaney Sides with Education Secretary DeVos in Protecting Powerful Student Loan Processors Over Borrowers Being Screwed
WASHINGTON, D.C. – Today, Consumer Financial Protection Bureau “Acting Director” Mick Mulvaney announced the bureau will be shuttering the student loan office and reassigning staff – a move seen by experts as a reversal of the bureau’s history of vigorously pursuing student loan cases on behalf of borrowers. To date, the CFPB has received at least 53,000 complaints about student loans from consumers around the country.
“Student loan borrowers deserve a champion at the CFPB – Mick Mulvaney is nothing but an industry stooge who will do whatever it takes to support Education Secretary Betsy DeVos in her effort to undermine borrowers and let lenders and loan processors like Navient rip people off without repercussion,” said Karl Frisch, executive director of Allied Progress.
He continued, “It is little wonder Mulvaney is going in for the kill at the CFPB’s student loan office. He’s already indicated he doesn’t think the bureau’s popular complaint database should publicly list the companies Americans are having issues with. This is a database that has received at least 53,000 complaints about student loans. Any reasonable person would see that as a reason to do more for students, not less.”
WHAT YOU NEED TO KNOW
As of May 2018, the CFPB had received at least 53,000 complaints about student loans from consumers across the country.
As of May 9, 2018, the CFPB has 53,612 complaints about “student loans” in their complaint database, including 21,348 about Navient Solutions, LLC alone. [“Student Loan” search in CFPB Consumer Complaint Database and Search of “Navient Solutions, LLC” in the CFPB Consumer Complaint Database, accessed 05/08/18]
In April 2018, Mick Mulvaney criticized the CFPB’s Consumer Complaint database, saying it was not his obligation to “‘run a Yelp for financial services sponsored by the federal government.’”
In April 2018, CFPB “Acting Director” Mick Mulvaney told a “group of banking executives” that based on his interpretation of the law he didn’t “‘see anything in here that I have to run a Yelp for financial services sponsored by the federal government.’” [Renae Merle, “Mick Mulvaney does not want you to see complaints against banks that bankrolled his campaigns, report says,” The Washington Post, 05/08/18]
However, according to professors at St. John’s University, the CFPB’s Consumer Complaint Database makes “companies that might previously have ignored negative feedback [pay] attention.”
“When the bureau began publishing consumer complaints on its website, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB more than 700,000 times, often by providing a remedy to the consumers.” [Jeff Sovern, Ann L. Goldweber, and Gina M. Calabrese, “Why We Need To Save The Consumer Financial Protection Bureau,” Huffington Post, 07/14/17]
Aside from CFPB’s database, the other options for borrowers who have a problem with their servicer aren’t great.
The Office of Federal Student Aid (FSA), which accepts some complaints on student loans, has previously been criticized for not effectively tracking borrower complaints.
The Department of Education’s FSA Ombudsman Group purportedly “works to resolve disputes related to federal direct loans and other government-backed debt.” [Susannah Snider, “Follow 5 Steps to File a Student Loan Complaint,” US News & World Report, 04/08/15]
However, a 2014 Office of Inspector General audit found that Federal Student Aid (FSA) “did not effectively monitor borrower complaints against [private collection agencies] and ensure that corrective actions were taken.” [“Handling of Borrower Complaints Against Private Collection Agencies: Final Audit Report,” U.S. Department of Education, July 2014]
FSA’s website even links to the CFPB complaint database when they say they will not accept complaints about private student loans.
“If you’ve completed the steps to resolve your dispute and you believe the answer you received is wrong or incomplete, you may need to contact the Federal Student Aid (FSA) Ombudsman Group of the U.S. Department of Education (ED). The Ombudsman Group is a neutral, informal, and confidential resource to help resolve disputes about your federal student aid.”
“They do not: serve as your advocate; overturn the decisions of other entities or make binding decisions; accept complaints about private student loans” [Getting Prepared Before Seeking Help, Federal Student Aid, accessed 05/08/18]
The link from “accept complaints about private student loans” links to the CFPB complaint database. [CFPB Complaint Database, Consumer Financial Protection Bureau, accessed 05/08/18]
Earlier this year, Education Secretary Betsy DeVos announced a plan “to try to shield [student] loan servicers from state regulations.”
In March 2018, Education Secretary Betsy DeVos announced a plan “to try to shield [student] loan servicers from state regulations.” [Kairlin Mulhere, “Is Telling States to Stop Cracking Down on Student Loan Companies,” Money, 03/09/18]
If this trend continues… who will students turn to if their loan servicers act inappropriately?
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