Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, said Wednesday he’s worried about the impact that rising student loan debt could have on the United States.
Mulvaney, also President Donald Trump‘s budget chief, told CNBC there appears to be a “disconnect” among many college students when it comes to the “making of a loan” and “repaying of a loan.”
According to data from the Federal Reserve Bank of New York, outstanding education debt in the U.S. has tripled over the last decade and now exceeds $1.5 trillion.
“If we teach an entire generation of people that the first major loan they take out, they don’t have to pay back, I’m worried about the long-term impact of that,” added Mulvaney, formerly a congressman from South Carolina who was a member of the hard-line conservative Freedom Caucus.
The CFPB was created as part of the 2010 Dodd-Frank Act, which was passed in the aftermath of the 2008 financial crisis and subsequent Great Recession. Dodd-Frank was intended to better regulate financial institutions and safeguard their customers against risky loans and abusive practices.
The Consumer Protection bureau has been highly scrutinized under Mulvaney.
Seth Frotman, the CFPB’s former top student loan official, accused Mulvaney in an August resignation letter of favoring “powerful financial companies” over consumers. Frotman said Mulvaney’s team suppressed the publication of a report drawing attention to questionable fees charged on college students’ bank accounts.
Mulvaney, who told CNBC he read the letter, said he had never heard of any complaints from Frotman while at the bureau. “I think he was more interested in getting his name in the paper,” he said.
Asked during the 10th anniversary week of the 2008 financial crisis, Mulvaney sajd on CNBC he would not describe students loans as a brewing crisis. But he did say changes are needed.