California Attorney General Xavier Becerra blasted the federal government’s handling of student debt, arguing that agencies have dropped the ball on protecting borrowers.
“The federal government has been AWOL in providing protections,” Becerra said during a panel discussion organized by the Student Borrower Protection Center (SBPC), “whether it's the Department of Education — which you would think would have the best interest of students in mind, but doesn’t — or the Consumer Financial Protection Bureau, which has the legal authority to protect student consumers, abandoning that role.”
He noted that both agencies include officials who previously worked for student loan servicers, adding that “it’s really disheartening to see the degree to which, and certainly secretary Devos… have stepped over people to try to get the very people in their shop that have caused some of these problems.”
‘A cottage industry’
California has taken steps to protect borrowers and even create a state-level consumer financial protection agency in recent years.
Governor Gavin Newsom signed legislation in late September to establish the Department of Financial Protection and Innovation, as well as a Student Borrower Bill of Rights that establishes statewide standards for student loan servicers and lenders, and strengthens protections for borrowers.
Seth Frotman, who resigned from the CFPB then and later founded the SBPC, sat on the panel and said that there is a “a cottage industry of predatory players seeking to get rich off the plight of struggling student loan borrowers” that run the gamut “from banks to small scams from private student lenders to for profit schools from student loan, servicers to debt collectors, private equity firms to social media.”
The entire system is premised on “abusing student loan borrowers,” Frotman stressed.
Becerra has not pulled punches when it comes to taking on federal government on issues regarding higher education. The California attorney general previously sued Education Secretary Betsy DeVos and the Department of Homeland Security and the U.S. Immigration and Customs Enforcement.
“California has had to sue the Trump administration over a hundred times to stop them from violating the law,” he stated, adding that the last thing students want “is to have to worry about being ripped off for having gotten educated.”
Aarthi is a reporter for Yahoo Finance. She can be reached at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.