ACTION NEEDED: Urge Your Senators to Confirm Richard Cordray and Let the CFPB Do Its Job
Student Loan Interest Rate Debate: There's Still Time to Reverse the Rate Increase
Coalition Calls on CFPB to Require Private Loans to be Certified by Schools
Step Forward on Negotiated Rulemaking
The Senate is expected to vote next week on whether to allow Richard Cordray to be confirmed as director of the Consumer Financial Protection Bureau (CFPB). Since 2011, the CFPB has been working to help student loan borrowers and protect students and families from unfair and deceptive lending practices. In this economy, consumers need a strong advocate and real financial protections more than ever.
your Senators today to confirm Richard Cordray and oppose efforts to weaken the
Yesterday the interest rate for subsidized Stafford student loans doubled from 3.4% to 6.8%, but it is not too late for Congress to act. Last Friday we asked you to tell Congress to reverse this rate increase so that college doesn't cost even more for over 7 million students this fall. Thanks to the nearly 700 of you who responded! There's still time to ask Congress to act if you haven't already. The Senate is scheduled to vote July 10 on the Reed/Hagan bill, which would reset the interest rate on subsidized loans to 3.4% for one year starting yesterday.
TICAS and dozens of other advocates for students and consumers have urged Congress to keep student loans affordable for today's students and tomorrow's. But Congress has been unable to agree on a permanent fix that would actually be better for students than letting rates double. Temporarily freezing the rates would protect students while giving Congress and the Administration time to develop a long-term plan that makes real sense for both students and taxpayers.
For more about federal student loan interest rates, check out our:
- New summary of interest rates and terms as of July 1, 2013
- One-page comparison chart of federal student loan interest rate proposals
- Blog post on why Congress should temporarily freeze rates on subsidized loans at 3.4%
Last month, TICAS and 28 other organizations sent a letter urging the Consumer Financial Protection Bureau (CFPB) to help prevent unnecessarily risky and costly student borrowing by using its authority to require schools to certify all private education loans.
With federal subsidized student loan interest rates now at 6.8%, we're concerned that without this action by the CFPB, more students will turn to private loans instead of safer federal loans. As the letter says:
"With private lenders currently marketing loans with variable rates starting as low as 2.25%, more students and families may mistakenly conclude that such loans are more affordable than federal loans with a fixed rate of 6.8%. Requiring school involvement now is also critical to prevent a resurgence of the reckless and deceptive private lending practices common before the recent financial crisis."
In May we told you that the U.S. Department of Education was seeking public comments on proposed topics for a new rulemaking process, and about the support for moving quickly to effectively enforce the statutory "gainful employment" requirement for all career education programs. TICAS — and the majority of other groups, Members of Congress, and individuals who submitted comments — asked the Department to take several steps to protect students and taxpayers from rip-off career education programs and unscrupulous schools.
The Department responded in June by announcing negotiated rulemaking on "gainful employment" to start this fall! This is a big step forward. But we'll have to keep pressing the Department to address other urgent issues raised in submitted comments, such as preventing schools from evading other laws designed to protect students and taxpayers, and providing relief for deceived and defrauded students.