“Every 28 seconds of everysingle minute of every single hour of every single day, a studentdefaults on their loan,” Frotman said. (Photo:Shutterstock)

|

(Bloomberg) –Seth Frotman oversaw the $1.5 trillion student loan market for the Trumpadministration. In August, he quit in a verypublic way, protesting in a widely circulated resignation letterwhat he called the White House's open hostility toward the nation'smillions of student loan borrowers. Now he's starting his ownwatchdog group to do what the government won't, and he's poachingformer colleagues to do it.

|

Having spent seven years with Consumer Financial ProtectionBureau, three of them as student loan ombudsman, Frotman said hedrove policy reform that returned $750 million to wrongedstudent borrowers.

|

Between July 2011 and August 2017, the CPFB's student protection unit handled50,700 private and federal student loan complaints and almost 9,800debt collection complaints related to private or federal studentdebt.

|

Related: Navient 'systematically' cheated studentloan borrowers

|

It spurred enforcement actions across the U.S. government thatled lenders including Wells Fargo, Sallie Mae andNavient—as well as now-defunct for-profit chainCorinthian Colleges—to return hundreds of millions of dollars toconsumers.

|

However, President Donald Trump's appointee to run the CFPB,Mick Mulvaney, shuttered the office in May as a part of an effortto make the bureau “more efficient.”

|

According to the Brookings Institution, almost 40 percent ofU.S. student borrowers will default on their loans by2023. More than 11 percent of student loan borrowers were90+ days delinquent as of Sept. 30, Bloomberg data show.

|

Government “hasn't just walked away” from helpingborrowers – it's ”arming the other side”

“The federal government hasn't just walked away from the fight,”Frotman said in an interview. “They're arming the otherside.”

|

Frotman, 40, said that while he was reluctant to leave thegovernment, “it wouldn't have been possible for me to stayand continue working to protect 44 million Americans withstudent loan debt.”

|

Following his resignation, he began planning the new group. OnWednesday, he announced the Student Borrower ProtectionCenter will partner with state and local policymakers,think-tanks, law enforcement and universities to help alleviatewhat he calls an insurmountable student debt crisis.

|

As the cost of tuition andborrowing continues to rise, student loans haveseen almost 157 percent in cumulative growth since the GreatRecession.

|

By comparison, auto loan debt has grown 52 percentwhile mortgage and credit-card debt actually fell by about 1percent, according to a Bloomberg analysis offederal and private loans.

|

Student loan debt also currently faces the highest 90+day delinquency rate of all consumer debt.

|

“Every 28 seconds of every single minute ofevery single hour of every single day, a student defaults on theirloan.”

“Every 28 seconds of every single minute ofevery single hour of every single day, a student defaults on theirloan,” Frotman said. “Still, in many ways, thestudent debt crisis is a quiet crisis. Student loan borrowers areforced to live with their struggles behind closed doors and withlittle oversight.”

|

Frotman, an attorney, previously worked on the SenateCommittee on Health, Education, Labor, and Pensions and was deputychief of staff for former Representative Patrick Murphy ofPennsylvania. Prior to his work on federal policy, he served ascounsel for the New Jersey State Senate, where he worked onconsumer protection legislation.

|

“Politics has infiltrated everything,” Frotman said of thecurrent U.S. administration. With Secretary of Education BetsyDeVos dismantling Obama-era policies that protectedstudent loan borrowers, he said, the outlook for students isworsening.Spokespeople for the CFPB and Department of Educationdidn't immediately respond to requests for comment.

|

On Tuesday, DeVos spoke at the Education Department's annualFederal Student Aid training conference in Atlanta. She called thefederal student aid program a “looming crisis in higher education”and blamed rising debt on the Obama administration. “If we, as acountry, do not make important policy changes in the way wedistribute, administer and manage federal student loans, theprogram on which so many students rely will be in seriousjeopardy,” she said.

|

Frotman's Student Borrower Protection Center, which is based inWashington, won't have the enforcement power of the CFPB, ofcourse. Instead, it will seek to publicize the cost ofdebt and delinquency on communities across the country, hesaid.

|

The nonprofit has established partnerships with New York City'sDepartment of Consumer Affairs, the San Francisco Office ofFinancial Empowerment and the Attorney General of theDistrict of Columbia, as well as the University of California'sIrvine School of Law.

|

Frotman said his goal is to create policy and litigationstrategies to tackle the crisis from the outside.

|

Currently, he has three full-time employees and 10 people in hisfellowship program, which will organize professionals working inrelated fields to produce research surrounding the debt crisis. TheSBPB has received financial support from the SandlerFoundation, among others.

|

READ MORE:

|

Think student loans are bad now? Justwait

|

How student debt affects retirementsaving

|

Student loan benefits more popular with workersthan employers

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.