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Biden administrator uses Rich Cordray, former CFPB chief, to control federal student loans

In an interview with POLITICO, Cordray said he was eager to work to increase access to higher education, which is so “an integral part of people’s success and chances in life.”

Cordray said he would bring the role of his experience in working on federal student loans to the CFPB and recalled his collaboration with the Department of Education during his tenure – an interdepartmental relationship that was often strained during the Trump administration.

Cordray noted that Rohit Chopra, President Biden’s candidate for head of the consumer bureau, was the CFPB̵

7;s best employee during much of the Obama administration.

“We already have a close working relationship,” Cordray said. “So in many ways, I think this is the perfect opportunity for us to make very good progress by thinking about how we fund and provide higher education in the United States to people for whom this is an increasingly important step forward in their lives. “

Cordray is an ally of Sen. Elizabeth Warren, Massachusetts, who is leading the progressive charge of changing the way the Department of Education manages its day-to-day student lending operations, controls student loan companies, and regulates colleges that receive federal student aid. .

Warren, who insisted on Cordray’s appointment, said in a statement that Correy would “apply his fearlessness and experience to protect student loan borrowers” and bring “much-needed accountability to the federal student loan program.”

The position – officially named chief operating officer of the Federal Student Aid – does not require confirmation from the Senate and is appointed by the Minister of Education.

Rachel Thomas, a spokeswoman for the Ministry of Education, confirmed that Cardona had appointed Cordry for a three-year term. She said Kordai’s first day at work would be Tuesday.

The Republican’s top Republican education committee member, Virginia Fox (RN.C.), criticized the Cordera’s election, which she nominated as a political selection.

“The $ 1.5 trillion student loan portfolio requires sound financial management,” Fox said. “I am skeptical that a failed Democrat politician who has a history of being absorbed by politics instead of caring for consumers has the ability and seriousness to perform the duties of FSA’s chief operating officer.”

Richard Hunt, chief executive of the Consumer Bankers Association, which represents private student lenders and paired with Cordray when he was director of the CFPB, sounded more conciliatory.

“For too long, politicians have been ignoring the root causes of the federal student crisis, and students and families are suffering,” Hunt said. “I hope Mr Cordray can reverse this trend.”

But Cordrey won praise in other Republican corners. A. Wayne Johnson, who was appointed by DeVos as the first head of the Trump administration, supported Cordray for the role.

“I don’t think there could be a better choice,” Johnson told POLITICO. “He understands the government, is well respected by consumer advocates, has the right skill set and understands regulatory oversight, which is a big part of the job.”

Cordey’s appointment also significantly increases the role of the education department, which has been relatively unclear in the past. But in recent years, this has become a major focus for progressives, who believe it is crucial to meeting the student debt relief they require, as well as strengthening regulation of the education and student loan industries.

Kordai said he sees his new role, like many jobs in government, as a combination of both operations and politics.

“Politics is just an ethereal theoretical thing without the supply of goods, and I saw that in the CFPB. And I think it will be the same here, “he said. “Of course, we are currently facing major decisions about the federal student loan program, about financing education and what to do with the accumulated debt. These are political issues, but they depend to a large extent on sound operations to make things effective across the country.

Cordray’s appointment comes as the Biden administration discusses how to respond to demands from some Democrats, including Senate Majority Leader Chuck Schumer, that the Department of Education cancel up to $ 50,000 of a federal student loan to a borrower through enforcement action. The White House said it had instructed the education and justice departments to investigate the issue, a review Cardona said Monday that is still ongoing.

Cordray said it was premature for anyone to draw conclusions about what his appointment meant for the Biden administration’s case on the cancellation of student debt. “There will be a number of important contributions to these decisions,” he said. “My vote will be part of that, but let’s not get ahead of it for now.”

“There are a lot of conversations that need to be held. Many legal analyzes need to be mastered. A lot of political thinking needs to be done, “Cordray added. “And I’m not ready to predict that just when I get into position.”

But beyond the fight for broad debt cancellation, Cordray will be able to achieve more immediate other key progressive priorities. This includes identifying some of the existing, targeted loan forgiveness programs, including those aimed at public service employees, severely disabled borrowers, or students who have been deceived by their college.

Seth Frotman, who served as a senior student loan officer at the CFPB under Cordray after Chopra and now heads the Borrower Protection Center, an advocacy group, praised the appointment as “a great step, showing that this administration is seriously doing what is needed to protecting borrowers and tackling the student debt crisis. “

Cordray’s appointment to the education department will also certainly lead to greater control over the student loan industry. During his tenure as director, CFPB filed numerous lawsuits against non-profit educational companies for their lending practices. He also filed a major lawsuit against Navient, one of the largest student loan services hired by the education department.

Perhaps the most pressing challenge for Cordray will be how the Department of Education restarts monthly student loan payments for the 40 million Americans whose payments and interest rates have been suspended since March 2020.

In January, the Biden administration extended until September 30 the break in monthly loan payments and interest rates in response to the pandemic.

Cardona said on Monday that the Biden administration was open to a possible further extension of the relief, but suggested it was unlikely. “It is not ruled out,” Cardona said in a speech at the annual conference of the Association of Educational Writers. “But at this point it’s September 30” for relief.

Cardona said the education department will be focused on helping borrowers “increase” until monthly payments resume as that date approaches. Consumer groups and industry officials have warned that an unprecedented restart of payments could be chaotic for borrowers and lead to an increase in arrears and defaults.

As he takes over the leadership of the student aid service, Cordray will be responsible for creating new large contracts with companies that collect federal student loan payments. Existing contracts, worth tens of millions of dollars, expire in the coming months.

Cordray will also be responsible for making major changes that Congress made last year in its free application for federal student aid. The Student Aid Office, which stores major federal databases of tens of millions of applicants and recipients of student aid, has also increasingly had to deal with growing cybersecurity threats and concerns in recent years.

The Biden administration has been considering a number of candidates for the job since Mark A. Brown, who detained the Trump administration, resigned earlier this year under pressure from progressive and labor leaders. Brown, who was appointed by then-Education Minister Betsy Devos, left with a full year left for his three-year term.

Abigail Seldin, who runs a charity focused on equity in higher education, was among the candidates who were among those considered for the job, although it angered some progressives from her job at a student loan company that bought her college comparison tool.

“Student borrowers deserve first-class, modern tools,” Seldin said in a statement Monday. “Richard Cordray will lead FSA civil servants with the necessary experience, gravity and key commitment to providing what students have long needed.”

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