Education Department Brings in Richard Cordray

2 min

The Department of Education (ED) has brought on former CFPB Director Richard Cordray as the Chief Operating Officer of the Office of Federal Student Aid (FSA). Mr. Cordray previously served as the CFPB's Director as well as the Attorney General of Ohio. In this role, he will be responsible for overseeing the $1.6 trillion portfolio of loans and student financial assistance programs authorized under Title IV of the Higher Education Act of 1965. This includes how the Department will restart on September 30 the monthly federal student loan payments that have been paused for 40 million borrowers due to the COVID-19 crisis. Mr. Cordray will also be responsible for the implementation of the changes Congress made in 2020 to the Free Application for Federal Student Aid (FAFSA) and negotiating contracts with those federal student loan servicers whose current terms expire in December 2021.

Mr. Cordray, of course, has a strong background in consumer protection issues and enforcement, as well as strong support from Senator Elizabeth Warren and others aligned with her in the consumer finance arena. Mr. Cordray's role at the FSA may indicate that the Biden Administration is taking significant steps in renewing and increasing integration and cooperation between the CFPB, state attorneys general, and ED in enforcement actions and examinations involving federal student loan servicers and collectors, as well as for-profit colleges. While headed by Mr. Cordray, the CFPB engaged in several high-profile cases against student loan servicers and for-profit colleges as well, experience he will likely employ at the FSA.

Mr. Cordray's three year appointment may lead to closer coordination with President Biden's nominee for the CFPB directorship, Rohit Chopra. Mr. Chopra previously served as the CFPB's Private Education Loan Ombudsman during Mr. Cordray's tenure. It is expected that student lending and student loan servicing issues with be a major focus of the CFPB under Mr. Chopra, once confirmed. Under Acting Director Dave Uejio, the CFPB has issued a complaint to the operators of a student loan-related debt relief company and highlighted a focus on fair lending/fair servicing, all which form part of student lending issues as well.

Student loan debt issues have been at the forefront of the Biden Administration, and Mr. Cordray's appointment serves a further evidence that, in addressing these issues, the administration plans to bring to bear administrative tools, in addition to executive and legislative efforts.