The former CFPB director will end his tenure as head of the Office of Federal Student Aid in June
Richard Corday is stepping down as the chief operating officer of the Office of Federal Student Aid, the government entity that oversees the nation's $1.6 trillion student-loan portfolio.
Cordray, who started his tenure just months into the Biden administration, will step down officially in June, the Department of Education said Friday. His departure comes as the agency is in the midst of the challenging rollout of the Free Application for Federal Student Aid, or FAFSA, and an overhaul pf the federal student-loan system.
"We are grateful for Rich Cordray's three years of service, in which he accomplished more transformational changes to the student aid system than any of his predecessors," Secretary of Education Miguel Cardona said in announcing Corday's departure. "It's no exaggeration to say that Rich helped change millions of lives for the better."
The Office of Federal Student Aid may not be a household name, but its work is crucial to the experience of college students and student-loan borrowers. The FSA disperses federal financial aid to colleges on behalf of students. The office also oversees student-loan payments and collections as well as the federal student-loan program's various repayment plans and forgiveness provisions.
Cordray is perhaps best known as the founding director of the Consumer Financial Protection Bureau. When he began his tenure at FSA in 2021, borrower advocates hoped that background meant he would take an aggressive approach to the student-loan industry.
In some ways, he did. Cordray reconstituted the office's enforcement unit, which was disbanded during the Trump administration. That department is focused on investigating schools accused of financial aid fraud or abuse.
In addition, under Cordray's watch, the FSA said it would withhold payment from all four major student-loan servicers over their conduct during the return to repayment following the three-year pandemic-era pause. Although advocates have complained for years that servicers make it more difficult than necessary for borrowers to repay their student loans, before Corday's tenure, it was rare for the government to take action over these issues.
Under Cordray, the office also oversaw multiple high-profile efforts by the Biden administration to revamp the student-loan system and provide more relief to borrowers, including by making fixes to the Public Service Loan Forgiveness program and launching SAVE, a new repayment plan.
His time at FSA was also marked by challenges. Last fall, when payments resumed for the first time after a pause of more than three years, borrowers spent hours on hold, received incorrect information from servicers and struggled to access affordable repayment and forgiveness plans. Roughly 40% of borrowers missed their first payment.
Cordray's FSA has also overseen the glitchy rollout of the new FAFSA. Congress required the Department of Education to overhaul the form in an effort to make it easier for students and families to fill out, and to direct more aid to low-income students.
But the botched launch has meant delays for students and schools, which experts worry will most hurt the students the changes were designed to help. Republican lawmakers have called on the government to oust Cordray over the FAFSA launch, saying he prioritized student-loan-forgiveness efforts.
Cordray's three-year term at the helm of FSA is up next month. It's not uncommon for FSA chiefs to stay beyond one term.
Corday's exit also comes as the Biden administration is looking to push through a new mass student-debt-relief plan. Officials have said they'd like to start canceling some debt this fall, but they face an uphill battle to implement the plan before the November presidential election.
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