The student-loan industry could face a crackdown as yet another Elizabeth Warren ally takes a top oversight job for Biden
- The Senate confirmed Rohit Chopra to lead the Consumer Financial Protection Bureau.
- Chopra helped create the bureau with Elizabeth Warren and cracked down on the student-loan industry.
- He joins other Warren allies in Biden's ranks fighting for student-loan borrowers.
Yet another ally of Massachusetts Sen. Elizabeth Warren - one of the biggest advocates for student-loan borrowers in Congress - joined President Joe Biden's ranks on Thursday.
Before leaving for recess, the Senate confirmed Rohit Chopra to lead the Consumer Financial Protection Bureau (CFPB), the government's consumer protection and oversight agency. Chopra previously served in the CFPB as its first student-loan ombudsman, and he was with Warren when she created the agency in 2011 to ensure people across the country are being financially protected. Now, he joins CFPB as student-loan companies face more stringent regulations leading up to February's payment restart after more than a year's pause. In recent weeks, three servicers have said they'll be shutting down, leaving 16 million borrowers to transition to new companies.
After Chopra's nomination was announced in January, Warren wrote on Twitter that she worked closely with him "to set up the CFPB and fight for America's children."
"It's terrific that President-elect Biden picked Rohit to run the @CFPB," Warren wrote. "He's been a fearless champion for consumers at the FTC (Federal Trade Commission) and will be a fearless champion leading the consumer agency."
Chopra left the CFPB in 2015 and was sworn in as a Federal Trade Commissioner in 2018, during which he worked to protect consumers from unfair business practices. But his work at the agency suggests the student-loan industry will be facing much stricter oversight from here on out.
As the agency's first student-loan watchdog, he primarily focused on unearthing problems with student-loan companies and ensuring the millions of borrowers across the country were not being mistreated. Chopra helped President Barack Obama establish the Student Aid Bill of Rights, which improves how the companies interact with borrowers, and in 2013, he led the bureau in discovering that more than 7 million borrowers were in default on their debt.
Since then, the CFPB has revealed a number of findings of student-loan abuses, and in some cases, has taken legal action against the companies. For example, the agency sued Navient, one of the biggest student-loan servicing companies in the US, in 2017 for "illegally failing borrowers at every stage of repayment," including causing borrowers to take on more debt than they could pay off.
Now that Chopra is confirmed to lead the agency, he will likely continue enforcing fair student lending. During his March confirmation hearing, Chopra said he will focus on protecting Americans with debt and he acknowledged the challenges that will come in February when the student-loan payment pause lifts.
"We are at a critical moment when so many borrowers are going to have to restart their payments," Chopra said during the hearing. He added that he will ensure the restart is "happening lawfully so we can avoid an avalanche of defaults when any moratorium might end."
Three student-loan companies have already announced their plans to shut down their services at the end of this year, bringing additional administrative hurdles to the already substantial burden the Education Department has with resuming payment collections for 43 million borrowers.
And Richard Cordray, the head of the Federal Student Aid office and another Warren ally, suggested in a conference earlier this month that those shutdowns are occurring because those companies do not want to be held to higher accountability standards under Biden.
Insider reported in July on the student-loan advocates that have joined Biden's ranks, and with Chopra now leading the government's consumer watchdog agency, more reforms to the student-loan industry are likely to come.