In 'major win for progressives,' former CFPB Chief Richard Cordray tapped to oversee federal student loans
Advocacy groups and progressives in Congress on Tuesday applauded the Biden administration's appointment of Richard Cordray to oversee federal student loans and financial aid, expressing hope that the former head of the Consumer Financial Protection Bureau will encourage the White House to offer much-needed relief to the country's 45 million student borrowers.
Education Secretary Miguel Cardona announced Monday that Cordray will serve as chief operating officer of Federal Student Aid, overseeing student loan servicing companies and the regulation of universities that receive federal student aid.
Sen. Elizabeth Warren (D-Mass.), an ally of Cordray who formed the Consumer Financial Protection Bureau (CFPB), was among those who applauded the appointment.
"I'm very glad he'll be protecting student borrowers and bringing much-needed accountability to the federal student loan program," Warren said of Cordray.
At CFPB, Cordray demonstrated a commitment to public service by working to rein in the payday lending industry, cutting lenders' revenue by two-thirds, according to the agency. During his tenure, the bureau returned nearly $12 billion to 29 million American consumers.
Cordray also oversaw the bureau when it brought several legal actions against for-profit education institutions and filed a major lawsuit against Navient, one of the largest federal student loan servicers.
His appointment comes amid calls from Warren, Senate Majority Leader Chuck Schumer (D-N.Y.), and other lawmakers who are demanding that President Joe Biden cancel up to $50,000 per borrower in student debt—without relying on the approval of Congress—under Section 432(a) of the Higher Education Act of 1965.
Cardona said Monday that the Education and Justice Departments are examining the possibility of canceling student debt, and Cordray declined to say whether student loan cancelation will take place with him at the helm of the Office of Federal Student Aid, but advocates expressed hope that his appointment is a "major win for progressives" on the issue.
"Cordray understands the challenges that student borrowers face, and unlike [former Education Secretary Betsy] DeVos, we are confident he will fight on behalf of borrowers rather than making their lives even more difficult," said Maria Langholz, spokesperson for the Demand Progress Education Fund. "In this role he must not only undo the disastrous legacy of DeVos but play a key role in making massive student debt forgiveness a reality."
Cordray now holds "the single most important job in the executive branch for canceling student debt," said Jeff Hauser, executive director of the Revolving Door Project. "We expect Cordray to take these needed reforms seriously given his excellent history at the CFPB."
"That said, we won't hesitate to be critical if needed," he added.
Other issues Cordray is likely to work on at the Education Department include reforming targeted loan forgiveness programs aimed at public service workers, borrowers with disabilities, and people who have been defrauded by colleges; and managing the department's decision to restart monthly federal student loan and interest payments following a pause that has been in place since March 2020, in light of the pandemic. The pause is currently scheduled to last until September 30.