The former individual overseeing student lending at the Bureau of Consumer Financial Protection has launched his own consumer protection organization, and one of the group’s initiatives will be to push cities and states to more aggressively enforce consumer protection laws against debt collectors.
Seth Frotman resigned as the BCFP’s student loan ombudsman back in August, scorching the Trump administration on his way out the door, accusing it of abandoning individuals to protect the interests of financial services organizations. Frotman is now the executive director of the Student Borrower Protection Center along with two of his former colleagues from the BCFP.
Calling the issues related to growing delinquency and default rates among student loan a “quiet crisis,” Frotman pointed out that every 28 seconds, another individual defaults on his or her student loan. That has led him to start the SBPC, which is being backed by the Sandler Foundation, among others. The Sandler Foundation has helped fund other consumer advocacy groups, such as the Center for Responsible Lending and the Center for American Progress.
“The federal government hasn’t just walked away from the fight on behalf of borrowers,” Frotman said. “It is actually arming the other side.”
Frotman said that one of the reasons that the amount of student loan debt has continued to explode and that more individuals are not able to repay their debts is because people keep waiting for lawmakers and regulators in Washington, D.C., to do something about the problem.
“I think the lessons of the last decade is that Washington has not and will not solve it,” Frotman said.