Monday, May 21, 2018 | 2 a.m.
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After facing accusations that he treated the students in his so-called university as prey, Donald Trump made a move last week that could make it easier for lenders to do the same thing to the millions of Americans with student loans.
It happened Wednesday, when the Consumer Financial Protection Bureau’s acting director revealed that the bureau’s student lending office would be shut down.
That’s alarming news for the holders of student loans, as the office was responsible for watchdogging potential abuses by lenders in the $1.5 trillion market. Over the years, the office’s investigations had led to the return of $750 million in loan funds.
Although it’s unclear whether the bureau will reduce its staff of investigators looking for abuses by lenders, it’s all but certain that a scaleback will happen. The reason is that the acting director, Mick Mulvaney, is part of Trump’s demolition crew of appointees who are dismantling the agencies and departments they’re directing.
Mulvaney, a former congressman from South Carolina, was a harsh critic of the bureau during his time in the U.S. House, and he’s repeatedly vowed to reduce the financial protection bureau’s operations to the bare minimum required by law.
It’s also not a good sign that the student loan office is being assigned to “financial education” functions, which suggests that staff will produce pamphlets as opposed to cracking down on unscrupulous lenders.
Finally, there’s Trump himself, a man who paid $25 million to settle a lawsuit accusing him of duping students in his now-defunct university. This is hardly someone that students can trust to shield them.
Consumer advocates have blasted the move, and with good reason.
“The Office of Students and Young Consumers has been instrumental in uncovering rampant lending abuses and deceptive practices that make it difficult for borrowers to manage their education debt responsibly,” Suzanne Martindale, senior attorney for Consumers Union, said in a statement. “It makes no sense to eliminate this critical office at a time when millions of Americans need a watchdog working to make sure lenders and loan servicers are following the law and treating them fairly.”
California’s attorney general, Xavier Becerra, put it more succinctly.
“The Trump administration is inviting the fox to take charge of the henhouse,” he said in a statement. “Aspiring college students and their parents can smell this raw deal from a mile away.”
Last week’s move was the latest by Mulvaney to weaken the bureau. He’s already folded the bureau’s fair lending division into the consumer education office and shut down actions against a number of financial companies accused of wrongdoing.
With Trump and Mulvaney running things, you can practically hear shady lenders licking their chops.
This is inexcusable. The need for protection is greater than ever, as problems in the student loan market have worsened despite the recovery. The number of Americans in default on their loans more than doubled from 2013 to 2017, according to the Education Department. As of December, 4.6 million Americans were in default.
And more students are taking out loans every day.
But despite numerous instances of abuse, the Trump administration is giving every indication that it’s leaving Americans to sink or swim.
With Trump and Mulvaney apparently putting investigators on a leash, consumer advocates are recommending that the holders of student loans watch out for themselves by taking such precautions as these:
• Being diligent about record-keeping, including documentation of payments, the type of loans that have been taken out and the name of the loan servicer. Students with federal loans can visit a national database to find the name and contact info for their servicer. It’s here.
• Exploring repayment options. One worth considering is an income-driven repayment plan, which allows loan holders to pay as little as 10 percent of their discretionary income per month toward their debt. To enroll in a plan, visit studentloans.gov. Although private loaners tend to offer fewer payment options than government sources, advocates say students who are struggling to make payments on private loans should ask their lender if options are available.
• Students who feel they’ve been treated unfairly can file complaints through a number of avenues. Those include specialists at many student loan servicers who help borrowers resolve problems, and, for those with federal loans, the Education Department’s loan complaint site at feedback.studentaid.ed.gov. In addition, veterans with student loans can file complaints here.
For questions about consumer protection in Nevada, contact the Nevada Department of Business and Industry at 702-486-2750 or the Nevada Attorney General’s Office at 702-486-3420.
