Richard Cordray, the former Director of the Consumer Financial Protection Bureau who is now running the federal government’s student loan program, sat down for an interview with the Washington Post that was published a few days ago. In the interview, Cordray talked about holding companies that service federal student loans accountable to meet certain benchmarks, how the Department of Education is addressing the end of forbearance programs, and his decision to rescind guidance making it easier for student loan servicers and collectors to be investigated by state and federal regulators.
Cordray said that if servicers do not meet “specific performance benchmarks” that contracts will be terminated or loans will be reallocated to other servicers. Those benchmarks will address how individuals with student loans are treated by servicers and how quickly servicers handle requests and problems, he said. While benchmarks have been place for years, Cordray said, he expects the Department of Education to be “rigorous” in its adherence to benchmark results moving forward.
The Education Department is “meeting intensively” about how to handle the end of the student loan forbearance program, which is scheduled to end later this year. Cordray said there are a lot of moving parts, but that the situation will be worked through “quickly in a common-sense way.”
When asked how the Education Department is going to help the 7.4 million borrowers who were in default when the pandemic struck and the additional individuals who may go into default once the forbearance program ends, Cordray deflected, saying that “things are going to be decided in the very near future.”
Cordray also said that “different parts of government” have to be able to work together “to ensure oversight and accountability of these very large servicers.” The Education Department will not “stonewall” anyone, which Cordray said he thought was happening under the prior regime.
