The division of the Consumer Financial Protection Bureau responsible for overseeing student loan issues will soon be no more.
CFPB Acting Director Mick Mulvaney is folding the Office of Students and Young Consumers into the Office of Financial Education, according to a memo he sent to staff last week. Both of those offices are part of the bureau’s Consumer Education and Engagement Division.
Mulvaney also will hire more political appointees and create an office of cost-benefit analysis staffed by economists who report directly to him, according to American Banker.
That reorganization includes the CFPB Student Loan Ombudsman, a position created by the Dodd-Frank Act and currently held by Seth Frotman, assistant director of the Office of Students and Young Consumers. His move into the financial education office means that he will no longer be involved in investigations that could result either in supervisory actions or in enforcement actions.
The move will “make the bureau more efficient, effective and accountable,” Mulvaney said in the memo, according to HousingWire. This justification brings the reorganization into line with Mulvaney’s stated intention to “fulfill the bureau’s statutory responsibilities, but go no further” expressed in his five-year plan for the CFPB.
Rep. Maxine Waters (D-Calif.), ranking member of the House Committee on Financial Services, disagreed with Mulvaney’s reasoning.
“The closing of the Office of Students and Young Consumers is deeply concerning and will most certainly set back the progress the Consumer Bureau had made to protect our nation’s students and consumers,” Waters said. “Under the leadership of Richard Cordray, the Consumer Bureau was vigilant in protecting the over 44 million student borrowers who collectively carry over $1.48 trillion in student loan debt in this country.”
Under Cordray, the CFPB brought actions spurred by complaints about student loans which resulted in more than $750 in relief to affected consumers, according to a 2017 report.
New York Financial Services Superintendent Maria T. Vullo also criticized the move.
“DFS is concerned with the CFPB’s troubling decision to minimize the role of the Office of Students and Young Consumers,” she said. “Instead of wisely borrowing the maxim ‘first do no harm,’ the CFPB’s new leadership continues to take aim at hardworking Americans by slashing vital consumer protections.”