President Biden has named a strong advocate for student-loan borrowers to lead the Consumer Financial Protection Bureau, a peace offering to the energized left flank of his party, and also a sign that the incoming administration wants aggressive oversight of student-loan servicers.
Rohit Chopra, a member of the Federal Trade Commission, previously served as the bureau’s student-loan ombudsman, where he was an ally of Sen. Elizabeth Warren, Democrat of Massachusetts, a key figure in the creation of the consumer-rights agency. Debtor advocates lauded the move, calling Chopra a “trailblazer” who cracked down on predatory for-profit colleges and rooted out abusive practices in servicing student loans.
“Rohit’s nomination means that the strongest advocate for student-loan borrowers in our current history will be leading the bureau,” said Natalia Abrams, executive director of Student Debt Crisis, an advocacy group.
The choice comes at a time when such advocates are hopeful on two fronts: the prospect of mass debt cancellation (Biden has indicated he’s open to forgiving $10,000 in student-loan debt, and progressives will push him hard for more) and increased scrutiny of predatory lending practices after four years of diminished enforcement.
The bureau for the last few years has done one single examination of the trillion dollars of federally held student debt.
Seth Frotman, also a former student-loan ombudsman for the bureau, said Chopra was early in recognizing the perniciousness of student debt in American society. That debt has exploded in recent years, surpassing all other forms of debt held by Americans other than mortgages, and raising urgent questions about access to higher education for the most vulnerable. Student debt also has implications for racial equality, with Black borrowers carrying a disproportionate amount.
“Rohit was on the forefront of identifying how this afterthought in consumer finance was growing more significant, more nefarious, in tens of millions of people’s lives,” said Frotman, now executive director of the Student Borrower Protection Center. “He was one of the first people to talk about the unfortunate similarities between the breakdowns we see for student-loan servicers and how that mirrors the worst practices of mortgage servicing.”
After President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, Chopra helped Warren start the bureau, in which he served as an assistant director overseeing its student-loan agenda. In this job, and the ombudsman role, he led efforts to secure hundreds of millions of dollars in refunds for borrowers victimized by the practices of loan servicers, debt collectors, and for-profit college chains, according to his FTC biography.
Chopra also served as an adviser to the U.S. education secretary, a role he used to advance the department’s efforts to improve student-loan servicing, reduce defaults, and beef up enforcement, according to the bio. He earned his bachelor’s from Harvard University, and his M.B.A .from the Wharton School at the University of Pennsylvania. Before entering government, he worked at the global consultancy McKinsey & Company, where he focused on financial services, health care, and consumer technology.
“He’s not a lawyer. He actually comes from a business background, so this is good news for consumers, and it’s not terrible news for businesses either,” said Dalié Jiménez, a professor of law and director of the Student Loan Law Initiative at the University of California at Irvine, who worked with Chopra at the bureau during its first year. “He wants the marketplace to be such that people who do the right thing are rewarded.”
Chopra could not be reached for comment. His nomination will need to be confirmed by the U.S. Senate.
The Education Department and the bureau have had a tenuous relationship from the start, as the new agency was trying to figure out how its watchdog role would intersect with the department’s policy role.
“The Biden administration likely has a clear role for what they want the Education Department and the CFPB to do,” said Robert Kelchen, an associate professor of higher education at Seton Hall University. “Bringing on Rohit Chopra is an indicator that they want a more muscular CFPB.”
Advocates for borrowers say the department under Betsy Devos obstructed the bureau’s student-loan oversight, instructing servicers to not cooperate with enforcement agencies like the bureau and state attorneys general. A 2019 lawsuit against the Trump administration by Student Debt Crisis charged that the bureau and the Education Department “illegally abandoned student-loan borrowers and allowed large financial companies to avoid accountability.”
With a new administration, said Abrams, of the Student Debt Crisis, , the lawsuit could be settled by the bureau’s taking a more aggressive watchdog posture. Abrams is hopeful that it “can sue the companies instead of us having to sue them.”
Frotman said the bureau’s higher-education priority should be to reassert its oversight of student-loan servicers. “The bureau for the last few years has done one single examination of the trillion dollars of federally held student debt. It’s unconscionable.”
He continued, “The bureau has allowed itself to be this subservient agency to the Department of Education. The Department of Education would tell private companies, don’t respond to this federal agency, and the CFPB would be like, OK.”
Debt activists like Thomas Gokey, whose group, the Debt Collective, is pressuring Biden to wipe away all student debt, say Chopra will be an advocate for debtors, student or otherwise. Chopra, Gokey says, understands debt “inside and out” because it was his specialty during his previous bureau stint.
But after four years of Trump, the bar for hope is low. “In general,” Gokey says, “it will be great to have a functional CFPB again.”
