Under Biden, CFPB will play a role in any student-debt cancelation — and help tackle student-loan servicers – Market Watch
Experts expect more aggressive oversight of the student-loan industry come January
The Consumer Financial Protection Bureau has been controversial since its inception. Initially proposed by Senator Elizabeth Warren, then a Harvard Law School professor, in 2007, the agency became a target of many congressional Republicans after its founding in the wake of the financial crisis.
That controversy has been apparent in the bureau’s approach to the student-loan industry over the past several years. During the Obama administration, the CFPB engaged in aggressive oversight of student-loan servicers, lenders and other companies in the sector — suing major firms and highlighting alarming trends through reports based on borrower complaints and other sources.
The Trump-era CFPB has shifted its enforcement attention from major companies in the space to scam operators. The agency has also skipped student loan-related reports, in some cases only publishing them under pressure.
That change in attitude pushed the agency’s then-student loan ombudsman, Seth Frotman, to resign in protest in 2018. Now, the executive director of the Student Borrower Protection Center, an advocacy group, Frotman and others expect to see a dramatic change in the Bureau’s approach to the student loan industry under a Biden administration.