Head of Student Loans Watchdog resigns

Mick Mulvaney, acting Director of the CFPB              Joshua Roberts | Reuters

Benjamin Franklin once said, "an investment in knowledge pays the best interest," but I don't think he would have predicted the student loan crisis in the US today. In the US alone, there are over 44 million people with student loans, totaling $1.5 trillion dollars of debt.

After the Great Recession in 2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010 with the intent to strengthen financial regulation in the US. In this legislation, a student loans ombudsman ("an official appointed to investigate individuals' complaints against maladministration") position was created within the Consumer Financial Protection Bureau (CFPB). The position had been held by Seth Frotman, who helped the CFPB protect borrowers from predatory lenders, for-profit colleges, and other bad actors, "return[ing] more than $750 million to harmed student loan borrowers."

Frotman resigned earlier this week, and in his resignation letter, Frotman claimed that acting director Mick Mulvaney, a member of Trump's cabinet, had "used the Bureau to serve the wishes of the most powerful financial companies in America" by undermining the bureau's independence from the Presidential administration, crippling the ability to enforce the law, and by "shielding bad actors from scrutiny." You can read the full letter here.

Sources:
https://www.forbes.com/sites/zackfriedman/2018/08/28/student-loans-cfpb-resign/#3dd05d381a14
https://www.npr.org/2018/08/27/642199524/student-loan-watchdog-quits-blames-trump-administration
https://www.politico.com/story/2018/08/27/seth-frotman-cfpb-resignation-student-loans-758036