Seth Frotman, who led Consumer Finance Protection Bureau’s student loan division, available for interviews March 26
AUGUSTA, Maine — Mainers are carrying more than $6 billion in education debt, while predatory tactics by student loan companies make it harder for borrowers to pay down their loans and reap the benefits of higher education.
Seth Frotman, the nation’s leading expert on the intersection of higher education finance, consumer protection and public policy, will join borrowers and advocates to support LD 995 — the Student Loan Bill of Rights — at a public hearing before the Maine Legislature’s Health Coverage, Insurance and Financial Services Committee.
The public hearing will take place at 1 p.m. Tuesday, March 26. Frotman will be available for interviews with journalists to discuss the way predatory student loan servicing companies exacerbate the education debt crisis and make it harder for borrowers to responsibly pay off their loans. To schedule an interview, contact Mario Moretto at mario@mecep.org.
Frotman is the founder and executive director of the Student Borrower Protection Center. Prior to founding the SBPC, he was Assistant Director and Student Loan Ombudsman at the federal Consumer Finance Protection Bureau.
“We are at a crossroads,” Frotman said. “Down one path, our leaders choose to stand up for the millions of Americans struggling under the weight of historic debt. Down the other, the student loan industry has free rein to run roughshod over a generation of student loan borrowers. It has never been more important that states — and in particular, the state of Maine — choose the right path. Hundreds of thousands of families across Maine depend on it.”
LD 995 would establish a Student Loan Bill of Rights to protect borrowers in Maine from predatory practices. It would establish rules to prevent student loan servicing companies from abusing or misleading borrowers. And it would create a new “Student Loan Ombudsman” in state government to help Maine borrowers resolve problems with these companies.
Additional resources:
- Frotman’s full comments in support of LD 955
- Sampling of Mainers’ complaints regarding student loan companies
- MECEP policy brief: Predatory actors worsen borrowers’ woes as education debt holds back Maine’s economy
Background:
During Frotman’s time as CFPB Student Loan Ombudsman, the bureau conducted a multistate investigation of Navient, the nation’s largest student loan servicer. The investigation culminated in a series of lawsuits filed by the CFPB and state attorneys general in 2017. He also led the development of the first comprehensive set of federal student loan servicing standards in 2016.
Frotman was catapulted into the national spotlight in August 2018 after writing a scathing letter of resignation from the CFPB. In his letter, he wrote that under President Donald Trump “the Bureau has abandoned the very consumers it is tasked by Congress with protecting” in order to “serve the wishes of the most powerful financial companies in America.”
A recent Maine Center for Economic Policy brief shows student borrowers in Maine struggle to repay their loans to the detriment of the state’s economy, while predatory tactics by student loan servicers exacerbate that economic damage by making it harder for borrowers to stay on top of their debt.
Trouble paying down debt is linked to trouble with loan servicing companies. According to MECEP’s research:
- 40 percent of Mainers with education debt report having had a problem with their loan servicer that led to their credit score being lowered.
- One-third said problems with loan servicers had increased the overall cost of their debt.
- Perhaps most troublingly, one in three Mainers with education debt said their loan servicer had not told them about income-based repayment plans which could have helped them better manage their debt.
