CFPB: Student Loan Ombudsman Resigns

On August 27, 2018 Seth Frotman, Student Loan Ombudsman at the CFPB since 2016, resigned. He had been instrumental in returning over $750 million to students who had been defrauded by student loan services. 

Frotman came to the CFPB from the Treasury Department in 2011 as part of the team tasked with creating the new agency. He began in the Office of Servicemembers Affairs where he helped crack down on lenders and retailers who preyed on service members.

When Dodd-Frank was passed into law, it included a specific position for a Student Loan Ombudsman to deal with the increasing number of cases of fraud by student loan services. In May 2018, Mick Mulvaney downgraded the position.  In violation of Dodd-Frank, Mulvaney took away the Student Loan Ombudsman’s enforcement powers, and turned it into a so-called “consumer education” position, curtailing all current work to protect student borrowers. 

In his resignation letter, Frontman details changes made by the Bureau since Mulvaney took over, including:

  • Undercutting enforcement of the law  
    “It is clear that the current leadership of the Bureau has abandoned its duty to fairly and robustly enforce the law. The Bureau's new political leadership has repeatedly undercut and undermined career CFPB staff working to secure relief for consumers.“

  • Undermining the Bureau’s independence
    “ The current leadership of the Bureau has made its priorities clear - it will protect the misguided goals of the Trump Administration to the detriment of student loan borrowers. For nearly seven years, I was proud to be part of an agency that served no party and no administration; the Consumer Bureau focused solely on doing what was right for American consumers. Unfortunately, that is no longer the case.“

    “…At every turn, your political appointees have silenced warnings by those of us tasked with standing up for servicemembers and students.“

  • Shielding bad actors from scrutiny
    “The current leadership of the Bureau has turned its back on young people and their financial futures. Where we once found efficient and innovative ways to collaborate across government to protect consumers, the Bureau is now content doing the bare minimum for them while simultaneously going above and beyond to protect the interests of the biggest financial companies in America.“

Frotman’s letter concludes with a sad commentary on the curent sate of the CFPB:

“…For seven years, the Consumer Financial Protection Bureau fought to ensure these families received a fair shake as they as they strived for the American Dream. 

Sadly, the damage you have done to the Bureau betrays these families and sacrifices the financial futures of millions of Americans in communities across the country.”


(Doing a little bit of catch-up on CFPB news.)


For more information:

Seth Frotman’s resignation letter, in full (3 pages) (NPR, 27 Aug 2018)  

Student Loan Watchdog Quits, Says Trump Administration 'Turned Its Back' On Borrowers (NPR, All Things Considered; 27 Aug 2018)

Nation's top student loan official resigns, says Trump administration has betrayed borrowers (AP, 27 Aug, 2018)

The Consumer Financial Protection Bureau

The CFPB Is Under Attack


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