In another note of terrible news, Acting Directory of the CFPB Mick Mulvaney has announced that the organization is closing their Student Loan Protection Unit, officially called the Office of Students and Young Consumers, which is the very same unit responsible for the amazing investigation into Navient’s lending services, and the source of the massive Navient Student Loan Lawsuit, which we’ve all been waiting to see settled.
But that’s not all that this Unit was responsible for, because they also spearheaded the effort to investigate and then prosecute Corinthian Colleges, home to Wyotech, Heald and Everest, each of which have been saddled with so many lawsuits, fines and penalties that they’ve been forced to shut down entirely.
What’s this mean for ordinary student loan borrowers? We’re being left out in the cold, again, by another hostile Republican who’s been put in charge of a Department which he wishes never existed in the first place.
This isn’t the first, and certainly won’t be the last, shot across the bow of the student loans ship, as we’ve been under fire repeatedly from our own Education Secretary Betsy DeVos, and basically anyone else appointed by President Trump.
These people appear to be hell-bent on destroying any and all protections the Obama Administration offered to student loan borrowers, including the amazing Repayment Plans, including the all-powerful Income Based Repayment Plans, Loan Forgiveness Programs and Discharge Programs (Borrower’s Defense and the Closed School Discharge Program), established during the glory days of student loan reform.
Virtually nobody other than For-Profit Schools or the Federal Student Loan Servicing Companies themselves will be applauding this move, as it’s one of the biggest reversals in the history of the CFPB, which was established to protect borrowers from industry predators like amoral lenders, servicers and schools.
What’s going to happen to the landmark $750,000,000 that the Student Lending Office has been in charge of returning to consumers impacted by fraudulent activity (mostly false advertising) by some of the country’s biggest schools, and even the Navient lawsuit that we’ve all been patiently waiting to be settled is now up in the air entirely.
The CFPB has refused to comment on how this change will impact the proceedings of that lawsuit, but fortunately, closing the CFPB isn’t going to stop the lawsuits initiated against Navient by several Attorneys General scattered across the country, so the pressure may let up a little, but it won’t go away entirely.
If you want to know how non-Governmental student loan watchdogs feel about this change, it’s not hard to figure out what they’re feeling. Christopher Peterson, Financial Services Director at the Consumer Federation of America said that “Shuttering the CFPB’s student lending office is an appalling step in a longer march toward the elimination of meaningful American consumer protection law… this activity promotes greater profits for a handful of debt collection businesses at the expense of mistakes, neglect and confusion for millions of student loan borrowers.”
Along similar lines, Allied Progress, another industry watchdog released a statement that read closing this Unit is a “reversal of the bureau’s history of vigorously pursuing student loan cases on behalf of borrowers”, which also mentioned that the CFPB has received over 50,000 complaints about student loans, including more than 20,000 complaints about Navient alone.
The worst thing about this reorganization is that the people who were employed by the Unit and who worked to bring down Navient and Corinthian Colleges are all still employed, but being told to focus on “educating the public about student loans via pamphlets and the website”, which is surely not going to help in the greater scheme of things.
Part of this reorganization also includes making a new office, called the “Office of Cost Benefit Analysis”, which Christopher Peterson of the Consumer Federation of America says will probably be used for nefarious purposes by making Borrower’s Defense to Repayment Applications take even longer to process, which means borrowers have to keep cutting those checks for additional months (years?) instead of getting the loan forgiveness that they deserve.
It’s a sad day for all of us, but especially those of us buried in student loan debt.
Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.
By: Tim Marshall
Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in 2011, where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.
how can we fight back against a government who is doing all they can to keep us quiet and shut us down by piling more debt and the fear of capitalization on top?
Vote for different Public Officials.
Found I couldn’t leave a comment under the three lawsuits against Navient article you wrote. Here is what they did to me back when they were still called Sallie Mae.I’d like to know how to find out if I am covered since the loans are paid off and where to “register” to be sure I am included on the list of people harmed by them. They did two things to me.
1) Each and every time I went to file an in school deferment (was in grad school in IL) for loans already in repayment (ones from when I got a degree in OH), they denied my in school deferment despite me being full time and I had to have the university (where I was enrolled in IL where I was in school getting a PhD) send things a second time, call them, etc and help me deal with it. EVERY SINGLE SEMESTER!! It got so bad they knew me my name, kept my paperwork in a file in someone’s desk, and knew what I needed each term, despite the school having 20,00 or so students.
2) I consolidated all my “new” loans I took out while in grad school in IL with the federal government (this was in 2007, I was working ABD finishing my dissertation and was only enrolled in 2 credits, the minimum so my new loans were finally in repayment, of course my old ones were immediately), but not the ones I had 3.5 years left to payback (the ones taken out when I was in school in OH). I was leaving the “already in repayment” ones all with Sallie Mae. Instead they sent all my loans over to be consolidated. I then had to spend several months getting the ones that were not to be consolidated sent back. Finally they were. But then Sallie Mae re-wrote them as 10 years left rather than 3.5 years (all were on the 10 year repayment plan), variable interest rate (my loans had been at a fixed rate with 3.5 years left) so they illegally changed the terms of my loans without my consent and no paperwork that I signed approving these changes).. It took 3 of their own advocates (the first two did nothing, threatening a lawsuit and outlining their illegal actions to the third – changing the terms of a loan without my signature, etc. – to get them to finally act), calling the CEO’s office (which resulted in the 3rd advocate), about 300 or so hours of mine and close to 4 years to for them to fix the problem and then credit my account money I paid that they credited against interest rather than principal. Loans have all been paid off prior to the switch to calling them Navient.
Would these kinds of action against me be covered by these lawsuits? How would I find out? Who would I contact? Cleary since my loans are paid off forgiveness isn’t at issue, although a “refund” or “damages’ would be. I lived in IL (and was in school there) when I took out the loans I intended to consolidate. I lived in OH and was in school there when I took out the ones I didn’t intend to consolidate (the ones they changed the terms of). I lived in ID when I consolidated the loans in 2007 (and when they changed the terms of the OH loans). I graduated from the IL in 2008 (but still lived and worked in ID).
Thanks.
Hi Liz,
Sorry, but I can’t really help with the lawsuit stuff – I’m covering those stories because they’re relevant to the Federal forgiveness programs, but I don’t have any contacts with the legal team pursuing this. If I were you, I would start by Googling for the Lawyers names/firms, contacting them, and seeing if there’s a way to get involved.
Hello, Thanks for all of the information! It’s a lot to process so I know it must have been a lot of work to write up. I have a question if you don’t mind. In one section you talk about a Borrower’s Defense to Repayment (BDAR) Discharge against Navient. Navient is my loan servicer and there has been some really shady things happening. Like I was awarded a retroactive deferment for a semester I had to get corrected enrollment info showing I was full time but since they had enrollment info showing me as not a registered student that semester they were applying interest. After I showed them the updated enrollment info and they granted the retroactive deferment they suddenly and inexplicably charged me with $5700 of capitalized interest that appeared out of nowhere (I’m still a full time student and all my loans are subsidized). So I was considering a BDAR complaint but from what I have seen on the .gov site it seems you can only make them against a school that defrauded you. Can you make a BDAR complaint against a loan servicer and if so, do I go through the same channels I would if I were making one against a school? Thanks for any help you can give me!
Hi Michael,
Yes, you can make a BDAR request against a servicer, and you use the same process. I’ve received confirmation from specific people who said that their loans were discharged because of servicer issues, so I know this is possible.
Can you please help me through the process for the BDAR for Kaplan University. I want to make sure I complete the application correct before submitting it for review. I came across your article and feel you would be a great help.
Thanks in advance.
Hi Linda,
Check out my article on the Kaplan University Lawsuits & Loan Forgiveness Program. It offers advice on how to fill out the BDAR application.