Rohit Chopra, the student loan watchdog at the Consumer Financial Protection Bureau and a key player in the agency's effort to expose abuses in the student loan market, is stepping down.
Chopra, 33, sent a letter of resignation to Treasury Secretary Jack Lew Wednesday, thanking him and others at the department for supporting the bureau's effort to protect consumers. The letter was obtained by The Washington Post.
"I am proud of the progress that we have made together to assist borrowers, promote transparency and hold accountable those who break the law," wrote Chopra, who has declined to say where he is going. "While more work is needed to correct the serious deficiencies in the student loan market, I have great confidence in the bureau’s ability to continue this important work on behalf of consumers."
The CFPB said its first student loan ombudsman will be replaced in the interim by Seth Frotman, Chopra's second in command in the bureau's office for students. Chopra's last day at the CFPB will be next week.
"Rohit Chopra has shined a spotlight on the problems facing millions of student loan borrowers as well as the broader impact of their struggle on our economy," CFPB Director Richard Cordray wrote in an e-mail to The Post. "His work is respected among policymakers, advocates, and industry. Rohit is setting the bar high as a strong advocate for student borrowers."
Before joining the CFPB, Chopra was a fellow at the McKinsey Global Institute, where he focused on student debt and other consumer credit markets. In his role at the bureau, Chopra never shied away from publicly chastising private student lenders for their treatment of borrowers.
Those financial firms, in turn, have accused Chopra and the agency of ignoring the problems in the federal student loan market. Still, Consumer Bankers Association president Richard Hunt, a critic of the bureau's actions on student loans, said, "We wish him well, and we look forward to working with his successor on this very important issue.”
Chopra was among the first to draw comparisons between the failures of mortgage servicers and student loan servicers, the middlemen who collect loan payments and have been accused of providing inconsistent information, misplacing paperwork or charging unexpected fees.
Chopra's work on the issue helped lay the groundwork for President Obama's Student Aid Bill of Rights, which, among other things, involves improving the way borrowers interact with servicers. The CFPB, the same agency that instituted changes in mortgage servicing, is now asking for public input as it decides whether similar protections are needed in the student loan market.
A key part of Chopra's role at the bureau has been tracking trends and unearthing problems in student loan lending. Under his leadership, the bureau first revealed in 2013 that there were more than 7 million Americans in default on student loans -- the number has since grown to 8 million. The bureau also highlighted the need for more refinancing options for borrowers looking to lower the interest rate on their loans, which encouraged more banks and other financial institutions to introduce or expand their refinancing programs.
Chopra also helped uncover the practice of private student lenders automatically placing people who pay their loans on time in default when their co-signer dies or declares bankruptcy.
The trend led eight congressional Democrats to introduce legislation for borrowers to be given at least 90 days following the death or bankruptcy of a co-signer to petition lenders to release them from the contract or find a new co-signer. Although the bill never made it out of committee, some lenders have scrapped the practice of auto defaulting.