Student loan watchdog resigns, claiming Trump administration has ‘failed borrowers’

In a letter, Seth Frotman said the CFPB has prioritized the "misguided goals of the Trump administration."

President Donald Trump's budget consigliere, Mick Mulvaney. (Credit: Mark Wilson/Getty Images)
President Donald Trump's budget consigliere, Mick Mulvaney. (Credit: Mark Wilson/Getty Images)

The Trump administration’s student loan ombudsman stepped down on Monday from the Consumer Financial Protection Bureau (CFPB), arguing in his resignation letter that acting director Mick Mulvaney has done “damage” that “sacrifices the financial futures of millions of Americans.”

Seth Frotman, who held the position of ombudsman and assistant director for the Office for Students and Young Consumers since 2016, is the latest government official to resign from the CFPB, which has undergone massive changes since Mulvaney took the helm in 2017.

As ThinkProgress previously reported, Mulvaney has consistently undermined his own agency, firing all 25 members of the agency’s advisory board and even refusing to request funding for the bureau, opting instead to use emergency funding to operate. Earlier this summer, Mulvaney announced that the agency would go by the name “Bureau of Consumer Financial Protection,” a change that seemed like a deliberate attempt to confuse consumers.

In May, Mulvaney ordered a dramatic restructuring of the agency, essentially ending the operations of its student lending office. As a result of those changes, Frotman saw most of his responsibilities — including evaluating tens of thousands of student loan complaints, returning millions of dollars to borrowers, and assisting in lawsuits against for-profit colleges and student loan services — disappear, leaving his team to handle only financial education matters, such as developing pamphlets and other communications content pertaining to student loans.


“The current leadership of the Bureau has made its priorities clear—it will protect the misguided goals of the Trump administration to the detriment of student loan borrowers,” Frotman’s letter reads, according to NPR.

Frotman cited a number of abuses by the administration and Mulvaney which, in his estimation, make it “clear that consumers no longer have a strong, independent Consumer Bureau on their side,” and indicates an unwillingness on the part of the federal government to provide oversight on the the $1.5 trillion student loan industry.

These abuses include the Education Department’s repeated attempts to block or repeal protections for victims of predatory lending practices at for-profit colleges. Last month, Education Secretary Betsy DeVos proposed a rule change that would make it harder for those students to get their loans forgiven.

In July, the CFPB claimed the Education Department was preventing the Bureau from accessing documents pertaining to its lawsuit against student loan servicer, Navient.


“When the Education Department unilaterally shut the door to routine CFPB oversight of the largest student loan companies, the Bureau’s current leadership folded to political pressure,” Frotman wrote. “By undermining the Bureau’s own authority to oversee the student loan market, the Bureau has failed borrowers who depend on independent oversight to halt bad practices and bring accountability to the student loan industry.”

Frotman further accused the CFPB of “doing the bare minimum” to protect consumers, citing widespread incidents of large banks ripping off students by imposing high fees. In response, Frotman said, CFPB “leadership suppressed the publication of a report prepared by Bureau staff” regarding the issue.

“You chose to leave students vulnerable to predatory practices and deny any responsibility to bring this information to light,” Frotman wrote, addressing Mulvaney directly.