May 10, 2018
Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB), announced Wednesday that the federal watchdog will effectively shutter its student loan division and shift its responsibilities to another office, a move that critics warn will lead to "open season on borrowers."
The restructuring is part of Mulvaney master plan to, as the New York Timesnotes, "refocus the agency away from its consumer finance enforcement and rule-writing mission and more toward providing consumers with information about their legal rights"--in other words, to "defang" the CFPB, a long-time target of the acting director as well as President Donald Trump.
While a CFPB spokesman framed the shift as "modest," insisting that agency personnel are "working on the same material as they were before," career officials told the Times they fear it "will sidetrack a major enforcement case the agency is pursuing against Navient, the nation's largest student loan collector."
The move was also sharply criticized beyond the agency, by consumer advocates and at least one member of Congress.
Pointing out that "student loan debt is exploding," Sen. Elizabeth Warren (D-Mass.)--one of the driving forces behind the creation of the CFPB--said that "it's clear" the Trump administration "has declared war on students."
\u201cStudent loan debt is exploding, but @MickMulvaneyOMB is planning to shut down the only federal office fully focused on protecting student borrowers from predatory companies. Add this to @BetsyDeVosED's anti-student work, & it's clear the Trump Admin has declared war on students. https://t.co/xLrhKHDmsS\u201d— Elizabeth Warren (@Elizabeth Warren) 1525904088
"At a time when the number of and the size of student loans are spiraling out of control, it's simply appalling to me that the administration is deciding to close the one office in the United States government that is exclusively focused on promoting fairness in student lending," Christopher Peterson, a senior fellow at the Consumer Federation of America, toldMarketWatch.
"Previously, the unit interacted with state law enforcement officials on student loan issues," MarketWatch explained. "The agency also collected complaints, pushed companies to respond to them, and held firms accountable for inappropriate practices. Now it will likely focus more on simply providing information to borrowers."
Challenging the CFPB's new priorities under Mulvaney, Whitney Barkley-Denney, senior policy counsel with the Center for Responsible Lending, told the Associated Press, "Education alone cannot stop predatory behaviors on the part of for-profit schools and servicers, nor can it help hundreds of thousands of Americans in serious debt because of these practices."
Wednesday's announcement comes as Mulvaney, who also runs the Office of Management and Budget (OMB), faces mounting charges of corruption and calls for his resignation.
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