House Passes Important Consumer Protections for Private Loan Borrowers
On December 11, the House of Representatives passed a bill that would create a new Consumer Financial Protection Agency (CFPA) to protect consumers from unfair and deceptive financial products and services, including private student loans. The House bill includes two important amendments we supported -- one to give the CFPA oversight over all private student loans, including those made by colleges to their own students, and another that requires lenders to confirm with the school that the borrower is in fact a student and is eligible to borrow the requested amount. This gives schools the opportunity to counsel students before they take out a private loan. Thanks to all those who wrote to their members of Congress about this issue!
The financial industry is still lobbying hard against the CFPA in the Senate, and consumers need to keep speaking out.
Please tell your senators that we need a CFPA with the power to protect students and borrowers from dangerous private student loans.
New Data Show Disproportionate Number of Defaults at For-Profits
Last week the U.S. Department of Education released a preview of college "cohort default rates" for federal student loans using a more robust methodology that will take effect in 2011. The new data show nearly 400,000 students who entered repayment in 2007 had defaulted by 2009, representing 12 percent of all students who entered repayment that year. Nearly half of these borrowers (44 percent) attended for-profit schools, even though only 1 in 14 students (7 percent) attend such schools. See our press release for more details.