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Federal Office to Protect Student Loan Borrowers Folds

A federal office that recovered $750 million for people defrauded through student loans has been closed. (thisisbossi/Flickr)
A federal office that recovered $750 million for people defrauded through student loans has been closed. (thisisbossi/Flickr)
May 14, 2018

SIOUX FALLS, S.D. — The federal Consumer Financial Protection Bureau has closed the doors of its Office of Students, which had been created to handle consumer complaints about student loan companies.

The Center for Responsible Lending says Americans have $1.4 trillion in student loan debt, with the average student borrower owing $30,000 when they graduate. Whitney Barkley-Denney, senior policy counsel with the center, said the office performed a vital service.

"The Office of Students was created to not just help educate borrowers about their student lending, but to enforce fair student lending practices against predatory for-profit colleges and predatory student loan servicers,” Barkley-Denney said. “And they've been very successful in doing that."

Last week, the U.S. House also voted to eliminate CFPB guidelines drafted in 2013 to combat racial discrimination by car dealers in making auto loans. Supporters of the rollbacks say current regulations represent government over-reach.

The Consumer Financial Protection Bureau was created after the Great Recession in an attempt to protect consumers from fraud and unscrupulous activities of lenders. Now, Barkley-Denney said it will fall on individual states to protect their residents.

"We think that states are going to need to step up and really take a leading and active role in making sure that borrowers are protected when they borrow for school,” she said.

Since it began, the agency has reclaimed $750 million dollars from lenders that were using illegal practices. In an email sent to his staff, Mick Mulvaney, interim CFPB director, said the agency would alter its mission to focus on providing consumers with information on their legal rights.

Roz Brown, Public News Service - SD