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Consumer Financial Protection Bureau Takes First Step to Protect Students but Hamstrung from Going Further
Minneapolis, October 26th – “Today the Consumer Financial Protection Bureau (CFPB) announced a new initiative to improve financial literacy tools for students before they enter college.
Providing better tools for students is a critical step, but it’s a limp when students need a leap. The CFPB cannot go further without a director. The CFPB is hamstrung from taking many stronger actions without a director because Wall Street lobbyists have convinced 44 Senators to block confirmation of the President’s nominee, Rich Cordray.
With an agency Director, the CFPB is the watchdog students desperately need to set rules of the game to rein in the worst abuses in the campus marketplace, such as those found in the private student loan market.
Students and families are increasingly using private student loans to pay for college, which is like putting college costs on a credit card. Most private loans have variable interest rates as high as 18% and have none of the borrower benefits that federal loans carry such as Income Based Repayment, which caps your monthly payments to your salary, and Public Service Loan Forgiveness, which forgives debt after ten years in public service professions.
Students with the greatest financial need get the worst rates and terms on private student loans even if the loans are advertised at lower rates. Those with the worst credit scores can have interest rates that are 5% to 6% higher than rates charged to those with excellent credit.
We applaud the CFPB’s efforts so far but it must have a director in order to clean up the marketplace for consumers seeking a fair private student loan to help pay for college.”
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U.S. PIRG, the federation of State Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization with campus chapter affiliates across the country representing hundreds of thousands of students.
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