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Federal consumer agency hires exec in complaint-ridden firm as watchdog

Bob Fernandez, The Philadelphia Inquirer on

Published in Business News

So far this year, more than 1,000 student borrowers have complained to the Consumer Financial Protection Bureau in Washington about the practices of an obscure but powerful Pennsylvania state agency that services their loans.

Now the consumer bureau has hired a high-ranking executive from the Pennsylvania Higher Education Assistance Agency as the nation's top student loan watchdog -- which means that Robert G. Cameron, a top compliance official for the agency, will be tasked to evaluate his former employer. Millions of student borrowers know the Pennsylvania organization as FedLoan, American Education Services or PHEAA.

Critics called Cameron's appointment another example of the revolving door of executives and staffers between the federal student loan bureaucracy and private companies, and of the overt campaign by the Trump administration to undermine Obama-era protections for student borrowers.

"It is outrageous that an executive from the student loan company that has cheated students and taxpayers -- and is at the center of every major industry scandal over the past decade -- is now in charge of protecting borrowers' rights," Seth Frotman, the former ombudsman and now executive director of the nonprofit Student Borrower Protection Center.

But Robert Kelchen, associate professor in higher education at Seton Hall University, held a more moderate view on Tuesday. "I'd like to wait and see what he does before I judge him," he said.

Cameron was paid $160,381 at the Harrisburg-based PHEAA, according to state records. In addition to PHEAA, Cameron had a 29-year career at the U.S. Army, serving as a staff judge advocate for the Pennsylvania Army National Guard, according to a CFPB release announcing his hiring last week.

 

The Consumer Financial Protection Bureau did not respond to questions.

In an instance earlier this year of the revolving door between the government and private student loan-servicing industry, PHEAA snagged Kathleen Smith as director of federal relations in April, paying her $235,000 a year.

Smith -- who will work closely with the Education Department at PHEAA -- once worked as a top official at the federal department. She has also been a staffer on the Senate committee responsible for higher education policy, and president of the powerful student-loan lobbying firm, Education Finance Council.

Based out of a gray-stone, six-story mid-rise, a short walk from Harrisburg's Capitol Building, PHEAA was created in 1963 to originate and service loans for the state's students. But that changed drastically with the 2008 financial crisis.

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