Remarks of Seth Frotman (as delivered)
with California Attorney General Xavier Becerra
October 11, 2018
Thank you, General Becerra. It is my privilege to join you today as California continues to fight for the millions of borrowers drowning under the weight of historic student debt. California is showing the nation how states can be critical players in the fight for borrowers’ rights.
Until last month, I had the privilege of serving as the top student loan official at the Consumer Financial Protection Bureau. I worked with leaders at all levels of government to crack down on the abuses plaguing 44 million Americans who struggle under the weight of more than $1.5 trillion in student debt. I heard directly from tens of thousands of student loan borrowers across all 50 states, including thousands of borrowers right here in California. Their complaints highlight the rampant illegal practices and inexcusable policy failures that have placed the American Dream out of reach for far too many.
Across America, more than 11 million borrowers are behind on their student loans. For those borrowers, and the countless others who are making their payments but barely getting by, these are “kitchen table” financial issues that affect every aspect of their lives. On everything from buying a home to choosing a career, from starting a family to saving for retirement, student debt casts a shadow that many Americans cannot escape.
As the burden of student debt continues to grow, its shadow also spreads unevenly across our communities. We know that people of color borrow more, and more often, than their white peers. And helping to drive this divide are predatory for-profit colleges that aggressively and deliberately target these communities, peddling the false promise of economic opportunity.
The abuses of the largest for-profit colleges stretch back for decades. First, these companies lied to students to get them in the door by promising a fast track to a brighter future. Then, companies loaded these students up with debts they knew could never be repaid, with the ultimate goal of driving large bonuses to executives and profits to shareholders.
And when the abuses committed by the largest for-profit colleges finally caught up with them, these companies sought protection from the bankruptcy system — a system that provides a critical “second chance” that is denied to the very borrowers that were preyed upon by these same companies.
As Washington raced to catch up to this widespread fraud and the extraordinary damage it did to American families, the Obama Administration took steps to offer these borrowers a fresh start. It built a path for borrowers to escape the fraudulently incurred debts that underpin this illegal business model.
But even before the Trump Administration set its foot in the door, it had its sights set on gutting this protection.
In the early days of this administration, Secretary DeVos stonewalled thousands of borrowers who were already pursuing these protections, leaving them “partially” buried under fraudulent debt. Then, she slammed the door on thousands of future borrowers that should have been eligible to seek relief. And now, she is proposing to effectively shut down any path to debt relief for defrauded borrowers, while also denying millions more the right to demand justice through the courts.
These actions are nothing short of brazen and illegal.
Fortunately, these egregious efforts have been met with strong opposition from state attorneys general, including General Becerra, and by organizations like the Housing and Economic Rights Advocates and the Harvard Project on Predatory Student Lending. These organizations are the champions for justice that millions of borrowers so desperately need.
Today’s announcement is another sign that this fight will continue — that these rollbacks will not go unchallenged.
But it is also clear that we must do more. We must create a different and better future for student loan borrowers. One in which we do not overlook the predatory actors that prey on their vulnerabilities. One in which we do not treat student loan borrowers as second-class citizens simply because the word “student” precedes the word “loan.” One in which we do not accept that Betsy DeVos alone controls the financial futures of more than 40 million Americans.
In important ways, this future begins here in California. This state has the chance to deliver on the promises made to the four million borrowers living here, and to paint a starkly different picture than the one offered 3,000 miles away.
California is beginning to do just that.
In suing Navient, General Becerra has fought back against abuses that harmed borrowers living in communities all across California — practices hurting every type of borrower, with every type of loan, in every stage of repayment. And the California legislature has made sure that the Department of Business Oversight has the authority it needs to go after the companies that are harming the nearly-four-million people in this state who owe student debt.
But we must not forget that Betsy DeVos and the rest of the Trump Administration will use every tool at their disposal to stymie these efforts. Tens of millions of student loan borrowers now have a federal government that is not only walking away from the fight, but is arming the other side.
This is why California’s work to protect student loan borrowers is so important.
And this is why I am proud to be here as General Becerra and the State of California show us how state government can — and must — be a fierce advocate for borrowers’ rights — one that stands up to special interests and fights on behalf of millions of families with student debt. This is how, in the face of an increasingly hostile federal government, we start to make progress. This is how we can drive lasting reform across the student loan system and protect the millions of student loan borrowers too often left behind.
But this is just the beginning. This is going to be a long, hard fight. And I am proud to stand with Attorney General Becerra, and with California, every step of the way.