Biden Administration Taps Former CFPB Director Richard Cordray to Oversee Federal Student Loans

May 14, 2021Federal Regulation, News

The Biden administration recently appointed former director of the Consumer Financial Protection Bureau (CFPB) Richard Cordray to lead the Education Department’s Office of Federal Student Aid, which oversees student loans and financial aid programs. The position, which carries a three-year term, is appointed by the Secretary of Education and does not require Senate Confirmation. 

As noted in POLITICO, the appointment comes as a victory to progressives who have urged President Biden to take aggressive action on student loans and for-profit colleges. 

“I think this is a perfect opportunity for us to make very good progress forward on thinking about how we finance and make available higher education in the United States to people for whom it’s more and more a critical step forward in their lives,” Cordray said in a POLITICO interview. 

Senator Elizabeth Warren (D-Mass.) pushed for Cordray’s appointment and praised the selection. 

“Rich Cordray has spent years fighting on behalf of American families,” she said in a statement. “Rich was a fearless and effective leader at the Consumer Financial Protection Bureau where he held big banks accountable and forced financial institutions to return $12 billion directly to the people they cheated. I’m very glad he will get to apply his fearlessness and expertise to protecting student loan borrowers and bringing much needed accountability to the federal student loan program.” 

Cordray’s appointment refines the role of the Education Department, which has become a major focus point for progressives that see it as crucial to achieving student debt relief. One of his biggest challenges will likely be how the department will restart monthly student loan payments that were deferred until October due to the pandemic. 

Cordray will be in charge of forming new contracts with the companies that collect student loans, as the current contracts are set to expire in the coming months. He will also be responsible for carrying out major changes that Congress made to the Free Application for Federal Student Aid (FAFSA), as the student aid office has increasingly addressed concerns of cybersecurity. 

He has received support from some Republicans like A. Wayne Johnson, who was appointed by former Education Secretary Betsy DeVos as student aid chief during the Trump administration. “He understands government, he’s well respected by the consumer advocates, he’s got the right skill set, and he understands regulatory oversight, which is a big part of the job,” Johnson said. 

Richard Hunt, chief executive officer of the Consumer Bankers Association, said he hopes that Cordray can reverse some of the long-term effects of the federal student debt crisis. 

Alternatively, the choice was criticized by Republicans, including Representative Virginia Foxx (R-N.C.), Ranking Member on the House education committee, who thought the choice was merely political.

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