President Joe Biden’s administration has picked Richard Cordray, a former Ohio attorney general and head of the Consumer Financial Protection Bureau, to head the office charged with overseeing the federal government’s student loan portfolio of more than $1 trillion.
Cordray, who will start at Federal Student Aid on Tuesday, will be a high-profile leader for an obscure but important agency that could play a central role in the debate over canceling student loan debt. Progressives quickly praised his selection.
“Cordray has a strong track record as a dedicated public servant who can tackle big challenges and get results,” said Education Secretary Miguel Cardona. “I am confident that under his leadership, Federal Student Aid will provide the kind of service that our students, families, and schools deserve.
As the first director of the CFPB, Cordray is considered a top ally of Massachusetts Sen. Elizabeth Warren, who has led a Democratic charge to push Biden to unilaterally cancel up to $50,000 per person of student debt. Cordray left CFPB in 2017 to run for governor of Ohio, narrowly losing 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’m very glad he will get to apply his fearlessness and expertise to protecting student loan borrowers and bringing much needed accountability to the federal student loan program.”
While little-known, FSA has significant responsibilities: It oversees the Pell Grant program to help low-income students, holds $1.4 trillion worth of student loan debt held by more than 40 million borrowers, manages an oft-maligned public service loan forgiveness program, and employs a quarter of the Education Department’s workforce. Progressives have long criticized the agency, arguing it fails to protect students from unscrupulous student loan servicers.
Cordray promised to create a new path forward for the agency. In a statement, he said he would work with Congress and the Biden administration to make sure FSA “does exactly what it was intended to do — create more pathways for students to graduate and get ahead, not be burdened by insurmountable debt.”
While running CFPB, Cordray challenged for-profit colleges and sued Navient, one of the nation’s largest student loan servicers, for errors he said heaped billions of dollars of additional debt onto students.
“These unlawful practices have cost student loan borrowers across the country both heartache and money,” Cordray said at the time.
He will immediately become a central figure in the intra-Democratic debate over whether or not Biden should unilaterally forgive student loan debt.
During his run for president, Biden said he supported legislation that would forgive $10,000 worth of debt. But there is little chance of such legislation making it through Congress.
Warren and Senate Majority Leader Chuck Schumer (N.Y.) have pushed for Biden to unilaterally cancel the debt, arguing it would stimulate the economy and reduce inequality.
The administration has taken steps toward that position, saying they are reviewing the legality and policy virtues of canceling debt. A provision Warren and New Jersey Sen. Bob Menendez included in the coronavirus relief package that passed in March would make any relief tax-free, removing one potential roadblock to mass cancellation.
Still, some moderate Democrats have argued mass forgiveness would disproportionately benefit upper-income Americans, who are far more likely to be college-educated.
It’s unclear where Cordray stands on the debate, but his new position would put him in charge of implementing any debt forgiveness plan Biden pursues.
He’ll also be in charge of handling the ongoing coronavirus-related pause on student loan payments, which Biden extended until the end of September.
Progressives have already pushed for Biden to continue the pause, and Cordray will be in charge of either extending it further or restarting student loan collection. Congress has also ordered the office to redesign the Free Application for Federal Student Aid, better known by its acronym FAFSA.
Cordray replaces Mark Brown, a retired Air Force general who resigned as head of FSA in March amid speculation the Biden administration would fire him. Betsy DeVos, President Donald Trump’s education secretary, had hired Brown in 2019.