President Joe Biden’s administration has chosen Richard Cordray, former Ohio attorney general and head of the Consumer Financial Protection Bureau, to head the office overseeing the federal government’s more than $ 1 trillion student loan portfolio.
Cordray, who will debut at Federal Student Aid on Tuesday, will be a leading leader for an obscure but important agency that could play a central role in the student loan debt cancellation debate. Progressives quickly welcomed his selection.
“Cordray has a solid background as a dedicated public servant who can take on great challenges and achieve results,” said Education Secretary Miguel Cardona. “I am confident that under his leadership Federal Student Aid will provide the kind of service our students, families and schools deserve.
As the CFPB’s first director, Cordray is seen as one of the main allies of Massachusetts Senator Elizabeth Warren, who led a Democratic charge to push Biden to unilaterally write off up to $ 50,000 per person in student debt. Cordray left the CFPB in 2017 to run for governor of Ohio, losing narrowly in 2018. His selection is not subject to Senate confirmation.
“Rich Cordray has spent years fighting on behalf of American families,” Warren said in a statement. “I am very pleased that he can use his fearlessness and expertise to protect student loan borrowers and provide much needed accountability to the federal student loan program.”
Although little known, the FSA has important responsibilities: it oversees the Pell grant program to help low-income students, holds $ 1.4 trillion in student loans held by more than 40 million borrowers, manages a program often criticized public service loan forgiveness, and employs a quarter of the Department of Education staff. Progressives have long criticized the agency, arguing it fails to protect students from unscrupulous student loan managers.
Cordray has vowed to create a new way forward for the agency. In a statement, he said he would work with Congress and the Biden administration to make sure the FSA “does exactly what it was supposed to do: create more pathways for students to graduate and advance. , without being burdened by an insurmountable debt.
While leading the CFPB, Cordray challenged for-profit colleges and sued Navient, one of the nation’s largest student loan managers, over mistakes he said racked up billions of dollars in additional debt. on students.
“These illegal practices cost student borrowers across the country both heartache and money,” Cordray said at the time.
He will immediately become a central figure in the intra-Democrat debate over whether or not Biden should unilaterally write off student loan debt.
During his run for president, Biden said he supported legislation that would write off $ 10,000 in debt. But it is unlikely that such legislation will be passed by Congress.
Warren and Senate Majority Leader Chuck Schumer (NY) pushed for Biden to unilaterally cancel the debt, arguing it would stimulate the economy and reduce inequality.
The administration has taken steps in this direction, saying it is examining the legality and political virtues of debt cancellation. A provision that Warren and New Jersey Senator Bob Menendez included in the coronavirus relief package that was passed in March would make any relief tax-exempt, removing a potential barrier to mass cancellation.
Still, some moderate Democrats have argued that mass forgiveness would disproportionately benefit high-income Americans, who are much more likely to have a college education.
It’s unclear where Cordray stands in the debate, but his new stance would put him in charge of implementing any debt cancellation plan Biden pursues.
He will also be tasked with handling the ongoing coronavirus-related hiatus on student loan payments, which Biden extended until the end of September.
Progressives have already pushed for Biden to continue the hiatus, and Cordray will be tasked with expanding it further or restarting student loan collection. Congress also ordered the office to redesign the free app for federal student aid, better known by its acronym FAFSA.
Cordray is replacing Mark Brown, a retired Air Force general who resigned as FSA chief in March as the Biden administration fired him. Betsy DeVos, Education Secretary to President Donald Trump, hired Brown in 2019.
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