Trump’s CFPB and Department of Education have illegally abandoned student loan borrowers and allowed large financial companies to avoid accountability. Trump-appointed Secretary of Education Betsy DeVos and CFPB Director Kathy Kraninger and their respective agencies have tried to shield large student loan servicers from scrutiny. Federal law requires the CFPB to supervise large nonbank loan servicers, including servicers of student loans owned by the federal government, for compliance with critical federal consumer financial protections. Rather than supervise the servicing of loans owned by the federal government:

  • The CFPB under then-Acting Director Mick Mulvaney and Director Kathleen Kraninger has adopted a new rule, wrongly asserting that CFPB only has authority over student loans owned by private creditors, which account for less than 20% of student loan debt.
  • Director Kraninger then hired Robert Cameron, a former executive at one of the nation’s largest student loan servicers and the private-sector firm hired to manage the PSLF program—the Pennsylvania Higher Education Assistance Agency (PHEAA)—as the Bureau’s new student loan ombudsman, despite PHEAA being the subject of thousands of consumer complaints and lawsuits for harming student borrowers during the time he was responsible for its compliance with consumer protection laws. Democracy Forward has separately filed a FOIA suit against CFPB for withholding records related to ethics waivers for Mr. Cameron.
  • Education Secretary Betsy DeVos also revoked a legally required Memorandum of Understanding with the CFPB that assists the agencies to coordinate and resolve student borrower complaints. Both agencies have since failed to establish a new MOU. Democracy Forward has separately requested Inspector General investigations into the revoked MOU and filed a FOIA suit against CFPB for withholding records on its efforts to reinstate an MOU.

The administration’s unlawful action leaves over 40 million student borrowers at risk. Loans owned by the federal government account for over 80% of the student loan debt held nationwide with student loan servicers responsible for, among other things, collecting loan payments and advising borrowers on resources and benefits to better manage their student loan obligations. So collectively, the agencies’ actions effectively leave the vast majority—81%—of student loan debt without proper federal oversight.

In recent years, numerous lawsuits have been filed against student loan servicers alleging widespread misconduct, miscounted payments, unnecessarily prolonged repayment, and growing debt burdens. This includes lawsuits targeting the administration of the PSLF program — a program that dedicated public servants rely on to discharge their loans after years of service. Many teachers, nurses, social workers, firefighters, and members of the armed forces depend on PSLF.

On behalf of Student Debt Crisis, we sued the Trump administration for shirking its legal obligation to supervise large student loan servicers, specifically those servicing federal loans. We filed this lawsuit with support from the Student Borrower Protection Center, a nonprofit founded by former senior CFPB officials who once led this critical oversight work.

Cory Hansen

Legal Analyst

Focusing on banking, finance, labor, tax, and trade issues.

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Karianne Jones

Counsel

Litigating cases against the Executive Branch on issues including veterans’ rights, travelers’ rights, and immigration.

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Michael Martinez

Senior Counsel

Former DOJ trial attorney challenging unlawful executive branch actions

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