Robert Cameron, New CFPB Student Loan Watchdog, Is A Former Industry Executive
AILSA CHANG, HOST:
Speaking of student loans, the federal government has a new student loan watchdog now. The job's been vacant since last summer. That's when the previous watchdog resigned, arguing the Trump administration was not doing enough to protect student borrowers. As NPR's Cory Turner reports, his replacement is coming from a company that manages student loans.
CORY TURNER, BYLINE: Robert Cameron is a U.S. Army veteran, and before taking this new job at the CFPB, the Consumer Financial Protection Bureau, he was a top lawyer for one of the country's biggest student loan servicers. It's called the Pennsylvania Higher Education Assistance Agency, known as PHEAA.
Now, as a servicer, PHEAA manages more than $400 billion of student debt, most of it for the U.S. government. Some consumer advocates are worried because PHEAA has come in for a lot of criticism, including for its handling of a troubled loan forgiveness program.
SETH FROTMAN: And the fact that they chose an industry insider from a company just mired in conflict, I think, is outrageous but unsurprising given their track record.
TURNER: Seth Frotman is head of the Student Borrower Protection Center, and he was the CFPB's last student loan watchdog, the one who resigned. But Jason Delisle, who studies higher ed policy at the conservative American Enterprise Institute, isn't buying that argument.
JASON DELISLE: I always feel like this is sort of a, like, can't really win, right? If you've got the experience, you know, shame on you. If you don't have the experience, well, also shame on you.
TURNER: This fight, though, isn't just about one man. It's actually about the job itself. The law says the private education loan ombudsman - that's the official title - should focus on private student loans like you get from a bank, that's as opposed to federal loans or the companies that manage them. And that's even though federal loans account for the lion's share of student debt.
During the Obama administration, the CFPB its private loan ombudsman argued that they were within the law to oversee federal loan servicers too. Now the Trump administration is saying, no, you're not. To that, Seth Frotman says...
FROTMAN: That's just not grounded in fact, and it's just a very convenient way to not do the work that they are required to do under the law.
TURNER: The CFPB to be saying this ombudsman will no longer look out for the lion's share of borrowers. I reached out to them for clarification. They did not respond. Jason Delisle at AEI says federal student loans and servicers will still be policed.
DELISLE: There's the Department of Education. There's Congress. There's the IG at the Department of Education. There's the Government Accountability Office.
TURNER: In fact, earlier this year, the ed department's inspector general - the IG - did review the department's oversight of federal student loan servicers, and the IG was not impressed. Investigators worried the department was not holding these companies accountable. The department, for its part, disagreed.
Delisle at AEI and Frotman, the former student loan ombudsman, do agree on one thing. Delisle says the old CFPB did raise some important red flags and that this new private loan watchdog should not completely ignore federal loans.
DELISLE: I wouldn't go all the way. I think it would be a mistake to completely move away from that role.
TURNER: And Delisle is not alone. After cheering the new appointment, even the Consumer Bankers Association said in a statement it is clear the federal student loan program is not working, and Mr. Cameron should also focus on implementing needed improvements there.
Cory Turner, NPR News. Transcript provided by NPR, Copyright NPR.