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Biden taps ex-consumer bureau chief to oversee student loans

Former Consumer Financial Protection Bureau (CFPB) Director Richard CordrayRichard Adams CordrayDennis Kucinich jumps into race to be Cleveland mayor Biden administration reverses Trump-era policy that hampered probes of student loan companies On The Money: IRS to start monthly payments of child tax credit July 15 | One-fourth of Americans took financial hits in 2020: Fed MORE will serve as head of the Education Department’s student loan office, Secretary Miguel CardonaMiguel CardonaHouse lawmakers roll out legislation to protect schools against hackers Education Department says anti-trans discrimination prohibited by Title IX Education Department erasing debt of students defrauded at for-profit college MORE announced Monday.

Cordray was appointed Monday as chief operating officer of Federal Student Aid, giving a fierce critic of the student loan industry oversight of the Education Department's $1.6 trillion loan portfolio.

“Education has made all the difference in life for my family and me, and it has been the foundation of progress in this country for generations. But too many students find that access to affordable, good-quality higher education remains far out of reach,” Cordray said in a statement, vowing to help “create more pathways for students to graduate and get ahead, not be burdened by insurmountable debt."

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Cordray, a Democrat, served as the first full-time director of the CFPB, the consumer watchdog agency created through the 2010 Dodd-Frank Wall Street reform law. He led the bureau from 2012 to 2017, elating progressives and enraging the financial industry with strict new regulations and aggressive penalties for misconduct.

In 2017, the CFPB under Cordray sued Navient, one the biggest U.S. student loan servicers, alleging that it “created obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained.” Navient has denied the allegations from both the CFPB and similar cases filed by state attorneys general.

“Cordray has a strong track record as a dedicated public servant who can tackle big challenges and get results. I am confident that under his leadership, Federal Student Aid will provide the kind of service that our students, families, and schools deserve,” Cardona said in a Monday statement.

Cordray, who will take his new post Tuesday, joins the Education Department as the Biden administration faces immense pressure to reduce the federal student loan burden and clean up years of servicing errors and program failures.

Democratic lawmakers and progressive activists are boosting pressure on Biden to forgive up to $50,000 in federal student debt per borrower through executive action. Supporters for unilateral forgiveness say doing so will help the hardest hit Americans rebound from the pandemic and reduce longstanding racial wealth disparities. 

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The White House said in February that Biden would review his legal authority to forgive student loans through executive action after the president previously expressed resistance to acting unilaterally. While Biden has opened the door to a debt relief executive order, he has explicitly ruled out going as high as $50,000 for every borrower.

Cordray has not taken a public stance on student loan forgiveness, but has expressed concerns about the financial toll student loans can take on borrowers, particularly those who attended defunct or fraudulent for-profit colleges.

Even so, Cordray may still be able to chisel down the federal student loan balance sheet through revamping the department’s failed student loan forgiveness programs. 

Under former Secretary Betsy DeVosBetsy DeVosErik Prince involved in push for experimental COVID-19 vaccine: report Biden administration reverses Trump-era policy that hampered probes of student loan companies DeVos ordered to testify in student loan forgiveness lawsuit MOREthe Education Department stifled the CFPB’s attempts to investigate student loan servicers and the department’s administration of the Public Service Loan Forgiveness Program. The CFPB had sought to find out why the public service forgiveness program rejected 99 percent of its applicants.

“Appointing Cordray to lead the Department of Education’s office of Federal Student Aid is a great step, showing that this Administration is serious about doing what’s necessary to protect borrowers and address the student debt crisis," said Seth Frotman, executive director of Student Borrower Protection Center, a legal and policy nonprofit, who also served under Cordray as the CFPB student loan ombudsman.

Cordray served as attorney general of Ohio from 2009 to 2011 before his appointment to the CFPB in 2012. He resigned from the CFPB to run for governor of Ohio, but was defeated in 2018 by Gov. Mike DeWineMike DeWineOhio GOP governor comes out against controversial state anti-vaccine bill Overnight Health Care: Biden says US donation of 500 million vaccines will 'supercharge' global virus fight | Moderna asks FDA to clear COVID-19 vaccine for adolescents FDA extends shelf life of J&J vaccine amid concern over expiring doses MORE (R), who also beat him in the 2010 election for attorney general.