Home News CFPB nominee sounds alarm on possible ‘avalanche of defaults’ after student loan payments restart – Yahoo! Money

CFPB nominee sounds alarm on possible ‘avalanche of defaults’ after student loan payments restart – Yahoo! Money

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President Joe Biden’s nominee to America’s consumer watchdog agency told Congress he was concerned about how servicers would handle borrowers when the pause on their student loan payments resume in October.

“We are at a critical moment when so many borrowers are going to have to restart their payments,” Rohit Chopra said in response to a question about student loans during his nomination hearing this week. And the CFPB’s role will oversee how “servicers [are] communicating, and making sure that borrowers can navigate their options.”

Chopra, who is a member of the Federal Trade Commission, previously served at the Consumer Financial Protection Bureau (CFPB) after its establishment by Sen. Elizabeth Warren (D-MA). He was also a former student loan ombudsman for the bureau. Chopra appeared in front of the Senate Banking Committee on Tuesday.

“The CFPB has a big role to play in working with the Department of Education, State Attorneys General, … to make sure that all of that is happening lawfully,” he added, “so we can avoid an avalanche of defaults when any moratorium might end.”

‘Costs of inaction were too high’
Payments on trillions of dollars in federal student loans have been paused since March 2020. But there are other critical issues regarding the loan machinery that he’s likely to address if confirmed, Chopra said.

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