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Richard Cordray, a close ally of Senator Elizabeth Warren who was the first director of the Federal Bureau of Consumer Financial Protection during the Obama years, has been chosen as the new head of federal student aid in the Biden administration, a post that will put him at the center of the swirling debate over student debt cancellation.

Student debt has been a difficult issue for President Biden. While he has approved the cancellation of up to $ 10,000 per borrower through legislation, he has also been pressured by some Democrats to sign an executive order if Congress does not act.

But Mr Cordray, whose position is in the federal Department of Education, the main lender for higher education, may be able to relieve the president of that burden by administratively forgiving student debt. Democratic leaders are asking for up to $ 50,000 in debt relief.

Mr. Cordray is a former Ohio Attorney General who worked alongside Ms. Warren on financial matters prior to her election to the Senate. He led the Office of Consumer Protection from 2012 to 2017, leaving the first year of the Trump administration to make a failed bid for the governorship of Ohio.

Administration officials said he and Ms Warren had a close relationship, raising questions about the relevance of their views on the issue of student debt cancellation. Ms Warren argued it was an overwhelming burden on young people and relieving it would reduce economic inequality. Some critics say that canceling student loans would disproportionately help the rich, who use them to pay for their graduate degrees, rather than helping the poor, who often have no college education.

In a statement after his appointment was announced on Monday, Cordray focused on student debt as a major concern, saying he looked forward to working with department leaders, the Biden administration and Congress to “ Create more pathways for students to graduate. and move on, not be burdened with insurmountable debt. “

However, he did not state his position on whether certain debts should be canceled. Education Department spokeswoman Rachel Thomas said the agency was working with the Justice Department and the White House to examine options on the issue.

Republican critics tried to block Cordray’s appointment to the office of consumer financial protection under Obama, and complained that the office had too much power and imposed unnecessary regulations on businesses. But his new appointment as director general of federal student aid, made by education secretary Miguel Cardona, is effective Tuesday and does not require further approval.

In a statement announcing the appointment, Cardona said it was “essential” for student borrowers to be able to count on the ministry “for help with paying for their college education, loan repayments and rigorous oversight of post-secondary institutions. “.

Mr. Cordray, five times “Jeopardy!” champion, has also been a vocal critic of for-profit colleges. “I hate how these hollowed out companies and mediocre colleges deceive consumers, employees and entire communities,” he wrote in a guest essay in The Plain Dealer, Ohio’s largest newspaper.

Mr Cordray succeeds Mark A. Brown, who was appointed Chief Operating Officer of Federal Student Aid by President Donald J. Trump in March 2019 and resigned in March of this year. Mr. Brown has become the target of consumer and labor groups, who have applauded his resignation. Ms Warren greeted Mr Brown’s resignation with a tweet saying it was “good for student borrowers”.

Mr Cordray made monitoring student loans a top priority for the Office of Consumer Protection, and in early 2017 – two days before Mr Trump took office – the agency sued Navient, the one of the Education Department’s largest student loan managers, for errors and omissions that Cordray said he wrongly added billions of dollars to borrower tabs.

The trial is ongoing and six state attorneys general have filed similar cases. The lawsuits describe routine errors and oversight gaps that, over time, have added to systematic failures, eerily similar to the confusion of borrower accounts and foreclosures in the mortgage services industry during the 2008 recession.

Mr Cordray described the country’s skyrocketing student debt – which eclipses all consumer debt other than mortgages – and the often mistaken way it is handled as a problem ripe for government intervention. “The domino effects of the student debt burden and loan servicing problems are holding back the next generation and hampering the economy,” Cordray wrote in his 2020 book, “Watchdog.”

The Department of Education is the primary lender for Americans who borrow to pay for college education. It directly holds loans to nearly 43 million people, for a total of $ 1.4 trillion.

In one of the government’s most sweeping pandemic relief measures, the ministry in March 2020 allowed borrowers to stop repaying federal student loans and temporarily set the interest rate on loans at zero percent. . This break is expected to continue until September.

As a result of this freeze, less than 1% of borrowers with federal loans are currently making payments on them. Restarting loan collections will be one of the biggest challenges facing the Department of Education this year.

Mr Cordray will inherit a plethora of other problems at the Department of Education, including significant mistakes and obstacles in the ministry’s public service loan forgiveness program, which aims to forgive the debts of teachers, military, nonprofit workers and others in the public service. careers.

The agency is also grappling with claims from hundreds of thousands of borrowers seeking redress through a program to eliminate the debts of people who have been defrauded by schools that have violated protection laws. of consumers.

Susan C. Beachy contributed to the research.

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