Biden administrator appeals to former CFPB chief Rich Cordray to oversee federal student loans
In an interview with POLITICO, Cordray said he was eager to take on work focused on improving access to higher education which is so “essential to people’s success and chances in life. “.
Cordray said he will bring to the role his experience working on federal student loan issues at CFPB and recalled working with the Department of Education during his tenure – an often strained interagency relationship under the Trump administration. .
Cordray noted that Rohit Chopra, President Biden’s candidate for the office of consumer affairs, was CFPB’s chief student loan officer for much of the Obama administration.
âWe already have a close working relationship,â Cordray said. âSo in many ways I think this is a perfect opportunity for us to make really good progress in thinking about how we fund and make higher education in the United States accessible to people for whom it is important. It is increasingly a critical step forward in their lives. “
Cordray is an ally of Senator Elizabeth Warren (D-Mass.), Who has led the progressive charge of overhauling the way the Department of Education manages its day-to-day student loan operations, oversees student loan service companies students and regulates colleges that receive federal student aid.
Warren, who lobbied for Cordray’s appointment, said in a statement that Cordray would “apply his fearlessness and expertise to protect student loan borrowers” and bring “a much needed responsibility to the federal student loan program.”
The position – officially called the Chief Operating Officer of Federal Student Aid – does not require confirmation from the Senate and is appointed by the Secretary of Education.
Rachel Thomas, spokesperson for the education department, confirmed that Cardona had appointed Cordray for a three-year term. She said Corday’s first day on the job would be Tuesday.
The leading Republican on the House Education Committee, Rep. Virginia Foxx (RN.C.), criticized the Cordray administration’s choice, which she ridiculed as a political selection.
âA $ 1.5 trillion student loan portfolio requires wise financial management,â Foxx said. “I am skeptical that a failed Democratic politician, who is used to being consumed by politics instead of dealing with consumers, has the ability and seriousness to serve as director of the operation of the FSA. “
Richard Hunt, the CEO of the Consumer Bankers Association, which represents private student lenders and argued with Cordray when he was director of CFPB, issued a more conciliatory note.
âFor too long, politicians have ignored the root causes of the federal student debt crisis, and students and families have suffered,â Hunt said. “I hope Mr. Cordray can reverse this trend.”
But Cordray has won praise in other Republican corners. A. Wayne Johnson, who was appointed by DeVos as the Trump administration’s first student aid chief, endorsed Cordray for the role.
âI think there couldn’t be a better choice,â Johnson told POLITICO. “He understands government, he’s well respected by consumer advocates, he has the right skill set, and he understands regulatory oversight, which is a big part of the job.”
Corday’s appointment also significantly elevates the role of an Education Department post that has historically been relatively obscure. But in recent years it has become a major focus for progressives, who see it as essential to securing the student debt relief they demand as well as tightening regulation of the for-profit education and loan industries. students.
Cordray said he sees his new role, like many government jobs, as a combination of both operations and policies.
âPolitics is just a light, theoretical thing without the cargo delivery operations, and I’ve seen it at CFPB. And I think the same will be true here, âhe said. âCertainly we are currently faced with major decisions regarding the federal student loan program, funding for education and what to do with the accumulated debt. These are policy matters, but they depend heavily on strong operations to make things work effectively, across the country. “
Cordray’s appointment comes as the Biden administration debates how to respond to demands from some Democrats, including Senate Majority Leader Chuck Schumer, that the Education Department to waive up to $ 50,000 federal student loan debt by borrower using executive action. The White House said it had tasked the education and justice departments to investigate the matter, a review which Cardona said on Monday was still ongoing.
Cordray said it was premature for anyone to draw any conclusions about what his appointment means over where the Biden administration will vote on the student debt cancellation issue. âThere will be a number of important inputs into theseâ decisions, he said. “My voice will be part of it, but let’s not go too fast on this.”
âThere are a lot of conversations to be had. Many legal analyzes have to be digested. A lot of political thinking needs to be done, âCordray added. “And I’m not ready to prejudge that by the time I get to this post.”
But beyond the fight for widespread debt cancellation, Cordray will be able to respond more immediately to other key progressive priorities. This includes fixing some of the existing targeted loan forgiveness programs, including those that target government officials, severely disabled borrowers, or students defrauded by their college.
Seth Frotman, who was the chief student loan officer at CFPB under Cordray after Chopra and now heads the Student Borrower Protection Center, an advocacy group, hailed the appointment as “a big step, showing that this administration is serious. to do what is necessary to protect borrowers and tackle the student debt crisis. “
Cordray’s appointment to the education department is sure to bring further scrutiny to the student loan industry as well. The CFPB, during his tenure as director, filed a series of lawsuits against for-profit educational companies over their lending practices. And he also filed a major complaint against Navient, one of the largest student loan managers hired by the Department of Education.
The most pressing challenge Cordray may face will be how the Department of Education revives monthly student loan payments for the 40 million Americans whose payments and interest have been suspended since March 2020.
In January, the Biden administration extended the break on monthly loan payments and interest to September 30 in response to the pandemic.
Cardona said on Monday that the Biden administration was open to a possible extension of that aid, but suggested it was unlikely. âThis is not out of the question,â Cardona said in an address to the Education Writers Association’s annual conference. “But, at this point, it’s September 30” for the relief expiration.
Cardona said the education ministry will focus on helping borrowers “speed up” the resumption of monthly payments as that date approaches. Consumer groups and industry officials have both warned that the unprecedented reboot in payments could be chaotic for borrowers and lead to an increase in delinquencies and defaults.
As he takes the helm of the student aid bureau, Cordray will be tasked with making major new contracts with companies that collect federal student loan payments. Existing contracts, which are worth tens of millions of dollars, expire in the next few months.
Cordray will also be responsible for making major changes Congress made last year to the free app for federal student aid. The Student Aid Office, which hosts the major federal databases on tens of millions of student aid applicants and recipients, has also increasingly had to deal with growing threats and concerns. cybersecurity in recent years.
The Biden administration has been considering a range of candidates for the post since Mark A. Brown, a member of the Trump administration, resigned earlier this year under pressure from progressives and union leaders. Brown, who was appointed by then Education Secretary Betsy DeVos, left with a full year remaining on his three-year tenure.
Abigail Seldin, who runs a charitable foundation focused on equity in higher education, was among the shortlisted candidates for the post, though she has aroused the ire of some progressives over her work in a student loan collection company who bought his college. comparison tool.
âStudent borrowers deserve top-notch modern tools,â Seldin said in a statement Monday. âRichard Cordray will lead FSA officials with the experience, seriousness and commitment to deliver what students have long needed.