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.
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