Meet the man now at the center of the student debt debate
Mr Cordray made monitoring student loans a top priority for the office and in early 2017 – two days before Mr Trump took office – the agency sued Navient, one of the top managers. of student loans from the Department of Education, for errors and omissions by Mr. Cordray. incorrectly stated added billions of dollars to borrowers tabs.
The trial is ongoing and six state attorneys general have filed similar cases. Navient spokesperson Paul Hartwick called the allegations “unfounded” and said the company was helping students by helping them navigate the complex student loan program.
Mr Cordray described the country’s skyrocketing student debt – which eclipses all consumer debt other than mortgages – and the often mistaken way it is handled as a problem ripe for government intervention. “The domino effects of the student debt burden and loan servicing problems are holding back the next generation and hampering the economy,” Cordray wrote in his 2020 book, “Watchdog.”
The Department of Education is the primary lender for Americans who borrow to pay for college. It directly holds loans to nearly 43 million people, for a total of $ 1.4 trillion.
In one of the government’s most sweeping relief measures against the coronavirus pandemic, the ministry decided in March 2020 to allow borrowers to stop paying their federal student loans, temporarily setting the interest rate at zero. percent. This break is expected to continue until September.
As a result of this freeze, less than 1% of borrowers with federal loans are currently making payments on them. Restarting loan collections will be one of the biggest challenges facing the Department of Education this year.
But Mr Cordray will inherit a plethora of other problems, including significant mistakes and obstacles in the ministry’s public service loan forgiveness program, which aims to forgive the debts of teachers, the military, workers at nonprofit and others in the public service.
The ministry is also grappling with the claims of hundreds of thousands of borrowers seeking redress through a program to eliminate the debts of people who have been defrauded by schools who have violated child protection laws. consumers.
Susan C. Beachy contributed to the research.