The House of Representatives passed legislation on Saturday that would establish a new Consumer Financial Protection Agency (CFPA) and new private student loan provisions. NACAC worked to ensure that the bill granted the CFPA authority over all private student loans and requires certification of those loans.
In October, NACAC partnered with education and consumer associations in a letter to the House Committee on Financial Services Chairman urging him to ensure the proposed CFPA has full authority over private student loans, including loans made directly to students by for-profit and non-profit postsecondary institutions. The measure was included in the legislation.
In partnership with education and consumer associations, NACAC sent a letter to Representatives Polis (CO), Murhpy (PA), and Bishop (NY) supporting their amendment requiring lenders to confirm with the school a student's enrollment and eligibility to borrow the requested amount. This gives schools the opportunity to counsel students before they take out an expensive private student loan and requires schools to inform students if they have any untapped federal loan eligibility.
In a media statement, the Institute for College Access & Success (TICAS) noted, "[t]hese votes will help protect Americans from risky private student loans and other dangerous financial products, deceptive marketing, and unfair treatment. Private student loans typically have variable interest rates with no cap and cost more for those who can least afford them. They also lack the important consumer protections – such as deferment, forgiveness, and flexible repayment programs – carried by federal student loans." The full statement is available online.
For details on private lending, please visit NACAC's Private Student Loans page.