business

Student Debt Relief Lawsuit 'Struck a Chord' Says Advocacy Group's Director

After national advocacy group Student Debt Crisis filed a lawsuit last week alleging the Consumer Financial Protection Bureau (CFPB) has failed to properly oversee the companies that manage federal student loan debt, program director Cody Hounanian said the organization was "inundated with calls" from people who say these companies have prevented them from accessing the benefits they're due.
Apparently, the lawsuit "struck a chord," Hounanian told Cheddar Monday.
Student Debt Crisis' lawsuit claims that after the Trump administration took over, it unilaterally changed CFPB's mission, leaving borrowers without recourse when loan holders refused their efforts to legitimately participate in debt assistance and forgiveness programs. While Student Debt Crisis traditionally directed users toward CFPB's resources, it now says that because the agency isn't living up to its role, it has had to steer its own resources away from its core mission in order to find other ways to help borrowers.
CFPB was created to protect Americans from lenders after 2008's financial crisis. The regulatory body was charged with supervising private student lending by non-bank lenders and supervising non-bank participants in the loan servicing market. It's the second charge Hounanian's group alleged CFPB has failed to uphold.
Student Debt Crisis argued the CFPB "abandon[ed]" the latter authority, in particular, the public service loan forgiveness (PSLF) program, first created in 2007. Through PSLF, student borrowers' federal student loans may be forgiven after 10 years of service, like as a firefighter, teacher, nurse, or a member of law enforcement.
A report released by the Department of Education in 2018 noted that more than 98 percent of PSLF applications that had been processed that year had been denied.
Before 2017, Hounanian said the organization sent supporters to the CFPB to file complaints and find helpful information. After Mick Mulvaney took over as acting director, he gutted the organization's staff and changed the agency's role. Before taking his new position, Mulvaney was a known critic of the agency as he had once described it as a "joke" and had sponsored legislation to abolish it.
"They rewrote the CFPB's mission without any input from lawmakers and the public," Hounanian told Cheddar.
If the federal government has abandoned its responsibility, he said, "then we're going to take the government to court and make sure they're doing their job to protect borrowers."
The suit notes other lawsuits have been filed against holders of federal student loans and claims that instead of addressing the issues alleged, the Department of Education has tried to stop the lawsuits from proceeding.
"It's never a good day when we have to take on the people who should be protecting consumers and students and parents with student loan debt," Hounanian said.
close
We use cookies and similar technologies on this site to collect identifiers, such as IP address, and cookie and device IDs as described in our Privacy Policy.