Rep. Porter Introduces Legislation to Promote Oversight of Student Loan Servicers
Congresswoman’s bill would require transparency and accountability from the federal officials responsible for helping student borrowers
Washington, DC, May 17, 2019
Congresswoman Katie Porter (CA-45) along with Congresswoman Suzanne Bonamici (OR-1) today introduced legislation to protect student borrowers and increase transparency and accountability within the student loan servicing industry. The CFPB Student Loan Integrity & Transparency Act of 2019 would strengthen the oversight abilities of the Consumer Financial Protection Bureau (CFPB)’s student loan ombudsman, the top federal official responsible for defending the interests of student borrowers struggling to repay their loans. This official’s oversight capabilities were undermined when CFPB Acting Director Mick Mulvaney closed the only federal office solely dedicated to protecting student loan borrowers: the Office of Students and Younger Consumers.
“With student debt in the United States reaching crisis levels, policing predatory student loan servicers and lenders is critical to the stability of the nation’s economy,” Porter said. “Student debt suppresses borrowers’ financial independence and stability before those borrowers have even entered the full-time job market. The CFPB under Mick Mulvaney abandoned its duty to stand up for student borrowers. This legislation is an important first step to restoring necessary oversight within the student loan industry and protecting our students.”
The ombudsman provides assistance to borrowers of education loans. Porter’s legislation would strengthen the office by requiring information sharing between the Department of Education (Ed) and the CFPB, maintaining adequate staffing levels in the ombudsman’s office, and mandating that student loan servicers cooperate with the ombudsman.
“Without a functioning Student Loan Ombudsman office, we simply don’t have the tools we need to stop loan servicers from taking advantage of borrowers or acting unlawfully—and student borrowers get hurt,” said Senator Udall. “This administration is failing borrowers by prioritizing corporate interests over the rights of students.”
The CFPB Student Loan Integrity & Transparency Act of 2019:
“The Trump Administration has done everything they can to muzzle the nation’s top student loan watchdog at the consumer protection agency, and student borrowers have literally paid the price—it’s time to fight back,” said Senator Warren.
“The financial lending industry already has enough powerful allies in Washington. Students and families need a strong, independent ombudsman looking out for their interests and protecting them from shady lending practices,” said Senator Brown.
“The CFPB Student Loan Integrity & Transparency Act, led by Congresswoman Porter and Congresswoman Bonamici, makes it clear that recent efforts by the Trump Administration to ignore borrowers' voices and coddle the student loan industry are unacceptable,” said Seth Frotman, Executive Director of the Student Borrower Protection Center and the former CFPB student loan ombudsman. “This critical legislation will put borrowers back at the center of the Bureau's consumer protection work.”
The bill has been endorsed by: Consumer Federation of America, National Consumer Law Center, Americans for Financial Reform, Student Debt Crisis, and Seth Frotman (Executive Director of the Student Borrower Protection Center and the former CFPB student loan ombudsman).
Senators Tom Udall, Elizabeth Warren, and Sherrod Brown introduced this legislation in the Senate earlier this year. Representatives John Sarbanes, Mark Takano, Alma Adams, Bill Foster, Ayanna Pressley, and Andy Levin are original cosponsors.
Congresswoman Porter is a strong advocate for students and consumers in the 45th Distrct. During the April district work period, she held townhalls at UC Irvine and Concordia University Irvine to hear from students. At a Financial Services Committee hearing, she exposed Consumer Financial Protection Bureau Director Kathy Kraninger for her unfamiliarity with the basics of consumer lending. She also called out Argosy University after reports that students hadn’t received financial aid funds.