Only the Most Conflicted People: Kraninger Appoints Servicer Industry Insider to Be Next Student Loan Ombudsman

August 16, 2019

WASHINGTON, D.C.– After 8 months on the job, CFPB Director Kraninger has finally gotten around to appointing a new Student Loan Ombudsman, an important role that deals with complaints from consumers who’ve been taken advantage of by the student loan servicing industry. The position was left vacant by her predecessor Mick Mulvaney after the previous ombudsman resigned last August in protest of the Mulvaney-led Bureau ‘abandoning’ its enforcement responsibility against illegal behavior from the student loan companies. Instead of choosing an experienced consumer advocate, Kraninger went the opposite direction and recruited a student loan industry insider out of the Pennsylvania Higher Education Assistance Agency, a servicer with a history of leaving students in the cold.

“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. But what else can you expect from Director Kraninger who won’t even admit there’s a student loan debt crisis,” said Derek Martin director of Allied Progress.

Martin continued, “Kathy Kraninger should remember that her job is to look out for the interests of consumers, not industry’s bottom line. We hope Mr. Cameron will demonstrate independence in his new role; we fear he will just be industry’s man on the inside.”

WHAT YOU NEED TO KNOW:

Robert G. Cameron Previously Oversaw “Compliance” At PHEAA (aka FedLoan)

On Friday, The CFPB Announced That Robert G. Cameron Would Become The Bureua’s New Student Loan Ombudsman. “The Consumer Financial Protection Bureau (Bureau) announced the appointment of Robert G. Cameron to serve as the Bureau’s private education loan ombudsman. Mr. Cameron is a Colonel and Staff Judge Advocate for the Pennsylvania Army National Guard. He has served in the United States Army for 29 years. Mr. Cameron also joins the Bureau from the Pennsylvania Higher Education Assistance Agency where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts.” [Press Release, “CFPB Appoints Private Education Loan Ombudsman,” ConsumerFinance.gov, 08/16/19]

• Cameron Oversaw “Compliance Activites” While At PHEAA. “While at the Pennsylvania Higher Education Assistance Agency, Mr. Cameron directed a staff of attorneys and other personnel and oversaw compliance activities at the agency. He was also responsible for ensuring the Pennsylvania Higher Education Assistance Agency’s compliance with numerous federal and state laws, including the Dodd-Frank Act.[Press Release, “CFPB Appoints Private Education Loan Ombudsman,” gov, 08/16/19]

PHEAA/FedLoan Has A Checkered History When it Comes To Serving Student Borrowers

The Pennsylvania Higher Education Assistance Agency (PHEAA), And Its Student Loan Servicing Division, FedLoan, Have Repeatedly Failed Student Borrowers.

FedLoan Attempted To Convert A Special-Education Teacher’s TEACH Grant Into A Loan, And Refused To Reverse Their Decision Until An Outside Attorney Became Involved.

FedLoan Converted A Special-Education Teacher’s “$4,000 TEACH Grant” Into A $4,000 Loan And Ignored All Her Attempts To Have The Decision Reversed. “The special-education teacher qualified for a $4,000 grant for tuition by teaching math in a poor public schools in Prince George’s County, Md., and Baltimore. But when Gammill sent her grant recertification paperwork into FedLoan, as required, it was rejected. And as Gammill, 35, scrambled to fix it with calls and emails, the Harrisburg-based agency converted her TEACH grant into a $4,000 loan and told her the decision was irreversible. Not willing to accept another $4,000 in debt, Gammill pleaded with the servicer, speaking to about 40 call-center employees and noting many of their company identification numbers over two years to get her grant recertified. Nothing worked.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

• “[The Special-Education Teacher] Prevailed Only After Engaging A Free Attorney At The Advocacy Group Public Citizen.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

A 2013 Lawsuit Revealed That PHEAA “Had No Formal Procedures To Investigate, Report, Or Deal With Identity Theft.”

A 2013 Lawsuit Found That The Pennsylvania Higher Education Assistance Agency, The Agency That Runs FedLoan, “Had No Formal Procedures To Investigate, Report, Or Deal With Identity Theft.”“According to a 2013 suit filed in federal court in Richmond, Va., PHEAA had no formal procedures to investigate, report, or deal with identity theft. Plaintiff and victim Lee Pele first learned that his identity had been stolen for two student loans amounting to $137,000 after a debt collector called him.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

• “That’s been the experience of many borrowers dealing with FedLoan, part of the state-run monolith Pennsylvania Higher Education Assistance Agency (PHEAA) that services about 7.5 million federal student borrowers.”[Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

In August 2017, the Massachusetts Attorney General sued PHEAA For failing to “Service The Public Service Loan Forgiveness And TEACH Grant Programs,” Despite Having “The Nation’s Exclusive Contracts To Service These Two Loan-Forgiveness Programs.”

In August 2017, Massachusetts Attorney General Maura Healy Sued PHEAA For Failing To “Service The Public Service Loan Forgiveness And TEACH Grant Programs, In Violation Of Massachusetts And Federal Law.” “In August 2017, Massachusetts Attorney General Maura Healey filed suit in state court, alleging that PHEAA’s had failed to service the Public Service Loan Forgiveness and TEACH grant programs, in violation of Massachusetts and federal law.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,”The Philadelphia Inquirer, 02/24/19]

• “PHEAA Has The Nation’s Exclusive Contracts To Service These Two Loan-Forgiveness Programs.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,”The Philadelphia Inquirer, 02/24/19]

Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America…

·     Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America.

• When Questioned By Rep. Ayanna Pressley (D-MA), Kathy Kraninger Refused To Acknowledge There Is A Student Debt Crisis In America. Pressley:Yes or no. Would you agree that we have a student debt crisis in our country? Kathy Kraninger:Certainly growing student debt is a concern that we absolutely need to look at and ensure that people… Rep. Pressley:Yes or no, would you agree that we have student debt crisis in this country? Kathy Kraninger:That word is a very loaded word and for that reason… Rep. Pressley:I’ll take that as a no. [“Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau,” House Financial Services Committee, 03/07/19 (3:59:46)]

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