Last week, we asked you to tell your senators to support amendments to the financial reform bill giving the new Consumer Financial Protection Bureau (CFPB) full authority over all private student loans. Otherwise, the largest lender - Sallie Mae -- and some of the riskiest loans might not even be subject to its oversight, leaving most consumers just as unprotected as they are now.
On Monday a broad coalition of more than 40 organizations - advocates for students, civil rights, higher education, and consumers - urged senators to close these loopholes. We're happy to report that Senator Durbin (IL) has filed an amendment to give the CFPB enforcement authority over private student loans financed by Sallie Mae's bank and other similarly-sized banks. And Senator Schumer (NY) filed one to ensure coverage of nonbanks that get into the lending business, including for-profit colleges that make costly loans to their own students.
Unfortunately, other senators have filed amendments that would gut the new consumer protection entity and reduce its power to protect consumers from predatory private student loans.
Your senators need to hear from you about the importance of the new consumer protection entity having full authority over all private student loans, and there isn't a moment to waste! Your support will help defeat harmful amendments and ensure the Durbin, Schumer and other strengthening amendments are offered and adopted.
New Fact Sheet: High Hopes, Big Debts (Class of 2008)
Our new fact sheet focuses on students who borrow $40,000 or more for their undergraduate education - almost twice the average debt for four-year college graduates. While still a minority, the number of students carrying such heavy debt is growing quickly. Last week the College Board released a report on borrowers with $30,500 in debt - taken together, we hope that these new data will improve public understanding of high-debt borrowing.
Here are some highlights from our analysis:
Ten percent of borrowers who graduated from four-year colleges and universities in 2008 owed at least $40,000 in student loans, up from 3% in 1996 (in constant 2008 dollars). That represents a nine-fold increase in the number of graduates with high debt, from 23,000 in 1996 to 206,000 in 2010.
Pell Grant recipients, who generally have family incomes under $50,000, are more likely to graduate with high debt; 14% of Pell Grant recipients in the class of 2008 graduated with at least $40,000 in student loans, compared to 8% of graduates who did not receive Pell Grants.
In 2008, 16% of African-American graduating seniors owed $40,000 or more in student loans, compared to 10% of Whites, 8% of Hispanics, and 5% of Asians.
Almost one in four (24%) of all 2008 graduates from for-profit four-year colleges owed at least $40,000 in student loans, compared to just 6% of graduates from public four-year colleges and 15% from private nonprofit four-year colleges.
(This message was sent to the Project on Student Debt mailing list on May 6, 2010.)