On Monday, the Senate Banking Committee will be voting on legislation to create a Consumer Financial Protection Agency (CFPA). Unfortunately, the current bill comes up short by not giving this new agency authority over all private student loans.
The House-passed version of the CFPA would give the new agency full authority over all private student loans, regardless of the institution making the loan. It also requires that students be notified of their eligibility for cheaper, safer, federal grants and loans before getting a private student loan.
The current Senate proposal has neither of these provisions. For example, some large for-profit schools are making loans directly to their students, even though they fully expect more than half of them to default. Under the Senate bill, the new agency would not have clear authority to stop this kind of predatory lending by schools, or even the ability to stop deceptive or predatory lending by all banks.
Please call or email your senator and ask them to support creation of a strong CFPA with full and independent authority over all private student loans and provisions like those in the House bill to ensure private loans are used only as a last resort.