The CFPB Must Prioritize the Student Debt Crisis as a Civil Rights Crisis

Abstract

With more than $1.7 trillion dollars in outstanding balances, student loan debt is the second largest class of consumer credit in the country, and it is rapidly growing. This crisis is fueled by a broken debt-financed higher education system that punishes borrowers for pursuing the American dream, leaving people who were told that higher education is a gateway to the middle class with unprecedented debt burdens. The reality for Black and Latino borrowers who bear the brunt of this debt load and its consequences is even more stark, making student loan debt a key barrier to racial equity. Acting Director Dave Uejio, the Consumer Financial Protection Bureau’s (CFPB) interim leader as of February 2021, recently directed the Bureau’s Division of Research, Markets, and Regulations to “prepare an analysis of the most pressing consumer finance barriers to racial equity to inform [the Bureau’s] research and rulemaking priorities.” At the start of his tenure, Acting Director Uejio said the agency would prioritize its role in addressing racial inequality as the nation’s top consumer watchdog. In this letter, the SBPC argues that any comprehensive analysis and regulatory prioritization grounded in removing barriers to societal equity must acknowledge the racially disparate effects of the student debt crisis and the decades-long failure to effectively regulate the student loan industry.

Keywords: student debt, student loan, CFPB, Consumer Financial Protection Bureau, rulemaking, racial equity, discrimination, consumer finance, fintech, financial technology