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Biden administrator taps Rich Cord Ray, former CFPB chief, to oversee federal student loans

The selection of Cord ray, who was previously attorney general of Ohio and ran in vain to become governor, is a major victory for progressives who have called on the Biden government to take more aggressive action against student loans and for-profit colleges.

Richard Cordray is expected to be appointed by Secretary of Education Miguel Cardona as head of the agency’s Office of Federal Student Aid. | AP Photo / John Minchillo

The Biden administration has hired Richard Cordray, the former director of the Consumer Financial Protection Bureau, to serve as the top official overseeing the federal government’s $ 1.6 trillion portfolio of student loans and a range of financial assistance programs.

The selection of Cord ray, who was previously attorney general of Ohio and ran in vain to become governor, is a major victory for progressives who have called on the Biden government to take more aggressive action against student loans and for-profit colleges.

Cord ray’s appointment to lead the Education Department’s Office of Federal Student Aid was announced Monday by Secretary Miguel Cardona, who praised his “ strong track record as a dedicated public servant who can tackle major challenges and deliver results.

” In an interview with POLITICO, Cord ray said he would like to accept a job that focused on improving access to higher education that is so “integral to the success and opportunities in people’s lives.

” Cord ray said he will bring his experience working on federal student loan issues to the CFPB and recalled working with the Education Department during his tenure – an interinstitutional relationship that was often strained during the Trump administration.

Cord ray noted that Rohit Chopra, President Biden’s nominee to head the consumer agency, served as the CFPB’s top student loan officer for much of the Obama administration.

“We already have a close working relationship,” said Cord ray. “So in many ways I think this is a perfect opportunity for us to make very good progress in thinking about how we fund higher education in the United States and make it available to people for whom it is increasingly a critical step forward in their lives.

Cord ray is an ally of Senator Elizabeth Warren (D-Mass.), Who has led the progressive assignment to oversee the way the Education Department manages its day-to-day student loan operations, oversees the student loan service companies and colleges that receive federal student aid.

Warren, pushing for Cord ray’s appointment, said in a statement that Cord ray would “ use his intrepidity and expertise to protect student loan borrowers ” and “ render much-needed accountability to the federal student loan program. ”

The position – formally called the chief operating officer of Federal Student Aid – requires no confirmation from the Senate and is appointed by the secretary of education.

Rachel Thomas, a spokesperson for the education department, confirmed that Cardona had appointed Cord ray for a three-year term. She said Corday’s first day of work will be Tuesday.

The most senior Republican on the House Education Committee, Rep. Virginia Foxx (R-N.C.), Criticized the government’s choice of Cord ray, which she derided as a political selection. “A $ 1.5 trillion student loan portfolio requires smart financial management,” said Foxx.

“I am skeptical that a failed democratic politician, who in the past was consumed by politics instead of looking after the consumer, has the competence and seriousness necessary to carry out the duties of COO of FSA.

to feed.” Richard Hunt, the chief executive officer of the Consumer Bankers Association, representing private student lenders and sparring with Cord ray when he was CFPB director, sounded a more conciliatory tone.

“For too long, politicians have ignored the root causes of the federal student debt crisis and students and families have suffered,” Hunt said. “I hope Mr. Cord ray can reverse this trend.

” But Cord ray garnered praise in other Republican quarters. A. Wayne Johnson, who was appointed by DeVos as the Trump administration’s first chief, supported Cord ray for the role.

“I don’t think there could be a better choice,” Johnson told POLITICO. “He understands government, he is highly respected by consumer advocates, he has the right skills and he understands regulatory oversight, which is a big part of the job.

” Corday’s appointment also significantly increases the role of an education department post that is historically relatively unclear.

But it has become a major concern for progressives in recent years, who see it as critical to executing the student debt relief they demand, as well as tightening regulations for for-profit education and student loans.

Cordbray said he saw his new role, like many government jobs, as a combination of both operations and policy.

“Policy is just a light theoretical thing without the operations to deliver the goods, and I saw that at CFPB. And I think the same will be true here, ”he said. “Certainly, we are now facing major decisions about the federal student loan program, funding for education, and what to do about accumulated debt.

Those are policy issues, but they rely heavily on sound operations to make everything run effectively across the country. “

Cord ray’s appointment comes as the Biden administration is debating how to respond to demands from some Democrats, including Senate Leader Chuck Schumer, that the education department waive up to $ 50,000 in federal student loans per borrower through executive measures. The White House has said it has ordered Education and Justice departments to study the matter, an evaluation Cardona said Monday was still underway.

Cord ray said it was premature for anyone to draw any conclusions about what his nomination means for where the Biden administration will be on the student debt cancellation issue.

“There will be some important input to those” decisions, he said. “My vote will be part of that, but let’s not get ahead of it for now.” “There are many conversations that need to be conducted. A lot of legal analysis has to be digested.

There is a lot of policy thinking that needs to be done, ”added Cord ray. “And I’m not ready to get ahead of it the moment I get into position.” But beyond the battle for widespread debt cancellation, Cord ray will be able to perform more directly on other major progressive priorities.

That includes solving some of the existing targeted loan forgiveness programs, including those targeting public service employees, severely disabled borrowers, or students being cheated by their college.

Seth Frot man, who was the senior student loan officer after Chopra at the CFPB under Cord ray and now heads the Student Loans Protection Center, an advocacy group, praised the appointment as “ a great move, showing that this administration is seriously engaged in doing what is needed to protect borrowers and address the student debt crisis. “

The appointment of Cord ray at the Education department will certainly also lead to more attention for the student loans sector.

During his tenure as director, the CFPB filed a slew of legal actions against for-profit educational companies over their lending practices. And it has also filed a major lawsuit against Navient, one of the largest student loan service providers hired by the Education Department.

Perhaps the most pressing challenge Cord ray faces will be how the education department is restarting monthly student loan payments for the 40 million Americans who have paused their payments and interest since March 2020.

The Biden government extended the pause on monthly loan and interest payments in January to September 30 in response to the pandemic.

Cardona said on Monday that the Biden administration was open to a possible further extension of that relief, but suggested it was unlikely.

“It’s not out of the question,” Cardona said in comments at the Education Writers Association’s annual conference. “But at this point it is September 30” before the expiration of the relief. Cardona said the Education Department would focus on helping borrowers resume their monthly payments as soon as that date approaches.

Consumer groups and industry officials have both warned that the unprecedented restart of payments could be chaotic for borrowers and lead to an increase in delinquencies and defaults.

While taking over at the helm of the student aid agency, Cord ray will be in charge of signing new major contracts with the companies collecting federal student loan payments. The existing contracts, worth tens of millions of dollars, will expire in the coming months.

Cord ray will also be responsible for pushing through the big changes Congress made last year to the free application for federal student aid.

The Student Aid Office, which houses large federal databases of tens of millions of applicants and recipients of student finance, has also increasingly faced increasing cyber security threats and problems in recent years.

The Biden administration had been considering a range of candidates for the job since Mark A. Brown, a remnant of the Trump administration, resigned earlier this year under pressure from progressives and union leaders.

Brown, who was appointed by then-secretary of education Betsy DeVos, left with a full year remaining on his three-year term. Abigail Sel din, who runs a charity dedicated to equality in higher education, was one of the candidates to be considered for the job, although she expressed the ire of some progressives over her work at a fundraising company for student loans that her college bought comparison tool.

“Student borrowers deserve top-notch, modern tools,” Sel din said in a statement Monday. “Richard Cord ray will lead FSA officials with the experience, gravitas and dedication to deliver what students have long needed.”