Richard Cordray to Oversee U.S. Student Loans

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Richard Cordray, former director of the Consumer Financial Protection Bureau, will oversee the federal government‘s $ 1.5 trillion student loan portfolio, the Department of Education announced Monday. Cordray will become the director of operations for the Department’s Office of Federal Student Aid, which is responsible for a variety of tasks related to student and borrower experiences paying for college and paying off their debts.

The FSA has been leaderless since March, when Mark Brown, who was appointed to the post by Betsy DeVos in 2019, resigned amid pressure from advocates and lawmakers. Cordray is possibly the highest-profile person to ever lead the office, indicating that his scope may be a priority for the Biden-era Department of Education. Education Secretary Miguel Cardona said he is confident that under Cordray’s leadership, the FSA “will provide the kind of service that our students, families and schools deserve.” “It is critical that students and student loan borrowers can depend on the Department of Education for help paying for college, support to repay loans, and strong oversight of postsecondary institutions,” he said. “Cordray has a strong track record as a dedicated public servant who can tackle big challenges and get results.” Although FSA is not exactly a household name, the office oversees a variety of functions that are operationally complex and also of great importance to borrowers. The FSA is responsible for disbursing loans and grants made to schools on behalf of students, overseeing companies that collect student loan payments from borrowers, implementing aid and repayment programs, and more. Progressive advocates and lawmakers had criticized the office under Brown’s leadership. Months after the CARES Act halted student loan payments and collections, the agency fought to stop garnishing the wages of some borrowers to pay off loans, for example. Even before Brown’s tenure, the FSA had been plagued with administrative challenges. Brown was the third person since 2017 to lead the office. In May of that year, James Runcie, who was appointed to the post during the Obama administration, resigned three years earlier and wrote in a letter to staff at the time obtained by The Washington Post that he was “incredibly concerned about the major restrictions that they imposed on him in our ability to allocate and prioritize resources, make decisions, and fulfill the mission of the organization. “DeVos replaced Runcie with A. Wayne Johnson, a former private student loan and credit card executive, who was replaced by Brown in March 2019. He eventually left the agency in October of that year and asked for student loan cancellation on his way. out. Cordray, who served as Ohio‘s attorney general and led the CFPB for five years prior to Running unsuccessfully for governor of Ohio faces a daunting task ahead. Borrower advocates and lawmakers have been calling for a number of refo rms, including making student loan forgiveness already on the books more accessible. They also want to increase oversight of colleges that receive student loan funds, particularly for-profit schools. Both of these goals will require the cooperation and leadership of the FSA. Student loan payments and collections are scheduled to resume in October, and the FSA director will play a crucial role in ensuring that the payment system runs smoothly again and borrowers do not fall into default. The Department of Education is also revamping the student loan servicing system, which is overseen by the FSA. If Cordray’s track record as a CFPB director is any indication, he is likely to take an aggressive approach to overseeing companies under his jurisdiction. During Cordray’s tenure, the CFPB returned more than $ 750 million to student loan borrowers. Additionally, the Obama-era CFPB filed high-profile lawsuits in the student loan space, including one against student loan servicer Navient NAVI, 0.56%, accusing the company of unnecessarily making it difficult for borrowers to repay. their loans, allegations that the company says are false (they have moved to have the lawsuit dismissed) and another against for-profit colleges for their private loan programs. Cordray told MarketWatch last year that under Biden’s administration, he expected the CFPB and the Department of Education to cooperate more closely on student loan matters. “I think the office will tend to go back in the direction we were in when I was the director and the Obama administration was in place,” Cordray said in an interview in November. “The approach was close cooperation between the CFPB and the US Department of Education. All of that was rejected when Betsy DeVos took office.”