Citing leadership's poor treatment of student loan borrowers, Seth Frotman, the CFPB's student loan ombudsman, has resigned.
Early this week, a top government official overseeing student loans resigned in protest over the current government’s policies regarding student loan borrowers. In a strongly worded resignation letter addressed to acting director Mick Mulvaney, Seth Frotman accused Mulvaney of undermining the Consumer Financial Protection Bureau’s ability to protect borrowers.
Frotman served as student loan ombudsman for the CFPB, a position he will be stepping down from by the end of the week, the Associated Press reported. His deputy Michael Pierce resigned on Monday as well, according to many sources.
In his resignation letter, Frotman accused Mulvaney of suppressing a report his office prepared. The report outlined new evidence that major banks are burdening student loan borrowers with questionable account fees.
The CFPB was created in 2010 as part of the Dodd-Frank Act. Frotman joined the CFPB during its formation, originally serving as part of the Treasury Department’s implementation team. In 2016, Frotman began serving as student loan ombudsman.
As student loan ombudsman, Frotman oversaw the Office for Students and Young Consumers. He also monitored the complaints that come in from student loan borrowers. Since its inception, the CFPB has overseen more than 60,000 student loan complaints and returned over $750 million to borrowers.
However, the CFPB has seen much of its authority sidelined under the current administration, NPR reported. Last year, the Department of Education announced it would no longer share information with the CFPB. After former director Richard Cordray resigned last November, President Trump appointed Mick Mulvaney as acting director of the CFPB.
Last May, Mulvaney moved Frotman’s division under the umbrella of the financial education office, which greatly reduced his ability to investigate borrower complaints. And Mulvaney has reduced or eliminated many of the provisions originally put in place under President Obama.
There were mixed reactions to Frotman’s resignation. Karl Frisch, executive director of Allied Progress called Frotman a “champion for students.” Holly Petraeus, who worked with Frotman at the CFPB, said she considers him “a true public servant.” She added that she believes he is resigning out of a desire to help student loan borrowers.
But Jenny Lee, a former attorney for the CFPB, said that Frotman’s letter lacked evidence to support his claims regarding the bureau’s actions, according to The Washington Post.
The CFPB declined to respond to Frotman’s allegations, instead issuing a statement thanking Frotman for his service and adding they hope he’ll find “fulfillment in other pursuits.”