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Former CFPB Head Richard Cordray Picked to Head Federal Student Aid Office

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What You Need to Know

  • The CFPB under Cordray uncovered Wells Fargo's illegal opening of unauthorized bank accounts.
  • The agency also pursued predatory practices by student loan servicers.
  • Cordray is an ally of Sen. Elizabeth Warren but has not weighed in on the student loan forgiveness debate.

Richard Cordray, the former head of the Consumer Financial Protection Bureau under President Barack Obama, has been appointed the chief operating officer of the Federal Student Aid office at the Department of Education.

Cordray, a former attorney general of Ohio and an unsuccessful candidate in the state’s 2018 gubernatorial election, will be responsible for managing the department’s student financial assistance programs, including grants, work-study and loans for students attending college or career school.

While he was CFPB director between January 2012 and November 2017, the agency pursued several student loan servicers for their illegal practices, which eventually netted millions of dollars for thousands of military service members and uncovered Wells Fargo’s illegal practice of secretly opening unauthorized deposit and credit card accounts, which was the first of several scandals at the bank. Another lawsuit against Navient, the largest student loan processor, remains outstanding.

U.S. Secretary of Education Miguel Cardona noted Cordray’s “strong track record as a dedicated public servant who can tackle big challenges and get results. I am confident that under his leadership, Federal Student Aid will provide the kind of service that our students, families, and schools deserve.”

About 45 million borrowers owe more than $1.7 trillion in student loan debt, which is the second largest debt burden for Americans after mortgages.

Mark Kantrowitz, an expert on college financial aid, told ThinkAdvisor that Cordray is a “good choice,” someone with “experience running a federal agency who knows how to get things done.”

Kantrowitz expects Corday’s experience with consumer protection “will ensure greater accountability among the federal contractors in the student loan program, thereby ensuring a much greater emphasis on the best interests of students and their families.” He also noted Cordray’s “ good relationship with state attorneys general, having himself been an AG.”

Cordray is also a close ally of Sen. Elizabeth Warren, D-Mass., who had recommended him for the CFPB position previously and who on Monday praised Cordray as a “fearless and effective leader at the Consumer Financial Protection Bureau where he held big banks accountable and forced financial institutions to return $12 billion directly to the people they cheated.”

She expects Cordray will bring that “fearlessness and expertise to protecting student loan borrowers and bringing much needed accountability to the federal student loan program.”

Warren has proposed that the federal government forgive $50,000 of federal student loan debt per borrower, but Cordray “has been careful to avoid making any definitive statements concerning his opinions about student loan forgiveness,” said Kantrowitz, noting that a review of the legal authority to implement loan forgiveness by executive order is currently being conducted by the Education and Justice departments and his appointment is unlikely to affect the results of that review.

Cordray is also an undefeated five-time champion and Tournament of Champions semifinalist on “Jeopardy!”