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Student Loan Watchdog Job Given to an Industry Executive

The Consumer Financial Protection Bureau’s new student loan watchdog is a former executive from a loan servicer that has repeatedly come under fire from government auditors — and even the consumer bureau itself — for a trail of serious mistakes.

The agency on Friday named Robert G. Cameron, previously a top compliance official at the Pennsylvania Higher Education Assistance Agency, as the bureau’s new ombudsman.

The ombudsman’s office is responsible for helping borrowers resolve issues with their lenders. Since the bureau’s creation, it has been the government’s loudest voice on monitoring problems in the $1.6 trillion student debt market. Most borrowers have federal loans, but the bureau said Mr. Cameron would focus on private student loans, which make up about 8 percent of the loans outstanding.

PHEAA is one of a handful of servicers paid by the Education Department to handle the government’s $1.5 trillion portfolio of federal loans and collect payments from nearly 43 million borrowers. Its FedLoan unit is the only servicer that works with borrowers in the Public Service Loan Forgiveness program, which has drawn widespread criticism for its complexity and its monthslong backlog for addressing errors.

“Only the Trump administration would think a loan servicing industry insider is the best person to look out for the interests of America’s student borrowers,” said Derek Martin, the director of Allied Progress, a consumer advocacy group.

In a written statement about his new job on Friday, Mr. Cameron said, “In all of my work, my commitment has always been to serve the American people.”

Mr. Cameron fills a post that had been vacant since the agency’s previous ombudsman, Seth Frotman — an Obama-era holdover — quit a year ago with a scathing letter that accused the bureau’s leadership of favoring large companies over consumers. Mr. Frotman, who left to start an advocacy group called the Student Borrower Protection Center, said Mr. Cameron’s appointment was “outrageous,” given PHEAA’s history.

A recent audit by the Education Department’s inspector general found deeper problems at PHEAA than at any other large servicer, and a 2017 report from the consumer bureau criticized the public service loan program’s shoddy execution. Borrowers have filed more than 9,000 complaints with the consumer bureau about the servicer.

The consumer bureau’s announcement signaled that Mr. Cameron would concern himself primarily with private loans, which would be a step back from the bureau’s previous approach of having its ombudsman also weigh in on problems affecting federal loan borrowers. PHEAA services private loans under its American Education Services unit.

But the law that created the position specifically referred to the role as a “private education loan ombudsman,” and under President Trump, the consumer bureau has made a point of interpreting its statutory powers literally.

Primary responsibility for federal student loans rests with the Education Department, which has its own ombudsman, Joyce DeMoss.

The Education Department’s ombudsman has generally been much more guarded than the consumer bureau’s about publicly discussing the government’s audit findings and enforcement activities, said Colleen Campbell, the director for postsecondary education at the Center for American Progress. Scaled-back oversight at the consumer bureau leaves a gap, she said.

“The Obama administration had a relatively generous perspective on the role,” Ms. Campbell said. “This administration has made it clear it will take an extremely narrow view.”


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