Seth Frotman, the Bureau of Consumer Financial Protection’s (BCFP or Bureau) former student loan ombudsman, launched the Student Borrower Protection Center (SBCP). The organization describes itself as follows on its website:
The Student Borrower Protection Center is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
The launch of this organization comes at the heels of U.S. Secretary of Education Betsy DeVos’s speech earlier this week warning of the student debt crisis and the issues with the Federal Student Aid program.
Frotman resigned from his position at the Bureau in August 2018 through a resignation letter addressed to the Bureau’s Acting Director Mick Mulvaney, carbon copied to several members of congress. In the letter, Frotman accused the current Bureau leadership of failing student loan borrowers by undercutting enforcement of the law, undermining the Bureau’s independence, and shielding bad actors from scrutiny. One of the accusations was that the Bureau intentionally suppressed the release of a report prepared by Bureau staff showing that “the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees.”
Frotman’s resignation letter caused a group of Democratic senators to send a letter to Mulvaney expressing their concern about and demanding answers for the accusations made by Frotman. Rep. Maxine Waters, who is expected to be named the new ranking member of the House Financial Services Committee following this month’s midterm election, urged the Committee to investigate Frotman’s allegations.