Fed Government’s Student Loan Watchdog Just Resigned In Rare Protest; But Now There Is No One Looking Out For Loan Holders & There Are No Plans To Install A Replacement
People In Our Area With Student Loans Will Need To Look Out For Predatory Lenders Taking Bold Moves Against Borrowers
In Meantime, Brindisi Wants State AG Office To Fill Leadership Void Via Consumer Bureau As Student Loan Debt Surges To $1.5 Trillion
With Mohawk Valley students preparing to go back to school and college, New York State Assemblyman Anthony Brindisi is sounding the alarm today on a critical development regarding student loans: the federal government watchdog in charge of policing the industry has just resigned and there are no plans to replace him. The result, Brindisi warns, could spell financial trouble for those applying for—and paying—student loans right now.
“If there is one position at the federal level that should be non-partisan it is the person who protects people paying and applying for student loans because this industry is pervasively polluted with shake down artists,” said New York State Assemblyman Anthony Brindisi. “To know that there is no longer a cop on the beat could send loan companies into a feeding frenzy and borrowers into a tailspin, and that is why I am urging immediate action by the New York State Attorney General.”
Brindisi said that last week Seth Frotman was the student loan industry watchdog at the Consumer Financial Protection Bureau (CFPB). But days ago, Frotman resigned in a scathing letter and there are no immediate plans to replace him. Frotman’s resignation was spurred, he told the press, because of misdeeds he saw within the administration as it relates to the handling of the $1.5 trillion dollar student loan bubble.
“Each year, tens of millions of student loan borrowers struggle to stay afloat. For many, the CFPB has served as a lifeline—cutting through red tape, demanding systemic reforms when borrowers are harmed, and serving as the primary financial regulator tasked with holding student loan companies accountable when they break the law,” Frotman wrote to CFPB Director Mick Mulvaney in this resignation letter.
Brindisi says all of this means one giant mess for those applying for and paying down student loans at home. Brindisi is now demanding action from New York State Attorney General Barbara Underwood. Brindisi is urging Attorney General Underwood’s office to immediately deploy a special focus on the student loan companies engaged in business within the State of New York via the Attorney General’s Bureau of Consumer Fraud and Protection.
Brindisi wants New York State to try and pick up the slack in enforcement being handed down from the federal level in an effort to ensure New York student loan applicants and loan borrowers are not deceived or shaken down by loan companies that could very well begin to abuse the marketplace and their borrowers.
Brindisi says that even with a federal watchdog there were countless cases of student loan companies going after students and their families. In one Central New York case, a student loan holder was killed right after his graduation in a horrible and tragic hit and run accident. Soon after the student’s death, the student loan company holding his loan began harassing the student’s parents, threating to take their home and car if they did not pay the loan. The case was later resolved and the student’s loans rightfully forgiven upon death, but it took intervention from Congress.
Brindisi says cases like this are sad and all too frequent. Brindisi worries that cases like the aforementioned will become the norm without a true and tested federal watchdog policing this industry.
Brindisi is urging all student loan holders and applicants to call his office with any complaints against loan companies that may be using the absence of a federal watchdog to take advantage of Mohawk Valley loan holders and applicants. Brindisi has pledged to work their cases if the federal government refuses to help.
“Parents and students have enough to worry about when it comes to student loans—like paying the actual bill,” said Brindisi. “They shouldn’t have to be on the receiving end of a political mess at the federal level but now they are. And to know that a shakedown era on student loans could be afoot demands immediate action, federal attention and New York State oversight.”
Brindisi also noted that Congresswoman Claudia Tenney has done next-to-nothing to address the growing crisis of student debt. Tenney’s numerous campaign contributions from the financial services industry, which profits off student loans, mean she is ill-equipped to argue for change.
Tenney has taken campaign cash from most major financial institutions, from Bank of America to Morgan Stanley, to Wells Fargo and J.P. Morgan Chase while serving on the House Financial Services Committee. She has conducted little oversight of these institutions and the CFPB. In fact, Tenney has argued that the CFPB is “unconstitutional,” a signal that she’s hardly on the side of borrowers that the bureau is trying to protect.
“Sadly, when it comes to the issue of student loans Claudia Tenney is partly to blame for the high interest rates and the lax regulations,” Brindisi concluded.