By Lizzie Thomas | Staff Writer
The former official in charge of handling student loan complaints for the Consumer Financial Protection Bureau said he believes the bureau is not putting consumers first. Baylor Financial Aid gave their advice to students on how to protect themselves from predatory practices by lenders.
In his resignation letter late last month, Seth Frotman said the “sweeping changes” under President Trump’s appointed acting director Mick Mulvaney have hurt millions of families. He said that protection from predatory practices from lenders “should know no ideology or political persuasion.”
The CFPB’s website says “The Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders and other financial companies treat you fairly.”
Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 during the Obama administration, which created the bureau and concentrated federal financial protection in one place.
According to Frotman, he and the CFPB were able to return more than $720 million to harmed student loan borrowers and “halt predatory practices that targeted millions of people in pursuit of the American Dream.”
However, he claims that CFPB leadership has given up its authority and independence and doesn’t enforce laws the way it should. He also claims that they shield bad actors, or those the bureau was designed to protect consumers against and from scrutiny.
“The current leadership of the Bureau has turned its back on young people and their financial futures,” Frotman said in his letter. “Where we once found efficient and innovative ways to collaborate across the government to protect consumers, the Bureau is now content doing the bare minimum for them while simultaneously going above and beyond to protect the interests of the biggest financial companies in America.”
By definition, CFPB is supposed to protect student borrowers from unfair default practices, unlawful fees and from pushing unmanageable interest rates.
“American families need an independent consumer bureau to look out for them when lenders push products they know cannot be repaid, when banks and debt collectors conspire to abuse the courts and force families out of their homes and when student loan companies are allowed to drive millions of Americans to financial ruin with impunity,” Frotman said.
Lisa Martin, senior director of financial aid, said over email that students and their families should research student loan options to determine which is the best lender for their needs.
“Baylor’s Student Financial Aid Office helps educate students and their families about their financial aid options, which may include student loans, as well as their rights and responsibilities as responsible borrowers,” Martin said. “In addition, Baylor offers a free financial education program called Student Financial Foundations that offers resources to Baylor students to help them understand personal money management for both their current and future financial success.”
Martin explained that as a part of the Student Financial Services, Student Financial Foundations joins with the Baylor Cashier’s Office and the Student Financial Aid Office. Together, they “present a full picture of loan management, scholarship availability, budgeting, credit card debt and many other areas of financial education.” This program includes a number of free online financial tools so that students can learn about their financial options “at their own pace, on their own time, from anywhere,” Martin said
Martin also pointed students to the U.S. Department of Education’s federal student aid website, which has information to help students manage and better understand student loans.
According to College Factual, 54 percent of Baylor students take out loans in their first year — averaging $11,926, including federal and private loans. Every year following, 48 percent of Baylor students take out loans averaging $6,856. After four years, this totals to around $27,424. Interest begins accumulating six months after graduation for federal loans and for private loans, generally as soon as they are disbursed.
Houston senior Paulina Agyei said she was prepared in high school for the collegiate process, but she was not equipped to make financial decisions. A month from orientation, her first Baylor bill was due, and she was not getting answers.
“I was very confused about it. Every decision I felt like I could make felt like it was putting me in a horrible bind,” Agyei said. “Everyone and their mom would always be like ‘Whoa, don’t get loans, apply for scholarships.’ But you can’t just apply for scholarships and expect to win whatever amount it is. It won’t really happen like that. So loans are an unfortunate necessity for people who want to go to college. Also, the unfortunate part of it is once you realize you need a loan, you have a very small amount of crunch time to get one.”
Agyei’s loans make sense to her and many around her are in the same position: her loans make sense, but it’s a very uncomfortable thing to know that you’re thousands of dollars in debt.
Frotman said students and their families should be aware that lenders do not always have their best interest in mind and that some within enforcement of existing laws are raising the alarm that not all student loan laws are being fully enforced. These resources provided by the Financial Aid office can help distinguish and illuminate borrowing options for higher education so students and families can protect themselves from unethical treatment.