Agency Asks Public for Input on Industry Practices
WASHINGTON, D.C.– The Consumer Financial Protection Bureau (CFPB) today announced that it is seeking information from students, schools, industry, and other stakeholders on the private student loan market. The CFPB published a from origination to servicing to collection.
“The private student loan market is one of the least understood consumer credit markets. It has been operating in the shadows for too long,” said Raj Date, Special Advisor to the Secretary of the Treasury on the CFPB. “Shedding light on this industry will benefit students, lenders, and the market as a whole.”
Private student loans are financial products used for higher education that are not originated through the federal student loan program. Many students, especially those attending private institutions, use these loans to finance tuition and other educational expenses. Too little is known about this financial product, however, which millions of Americans have used and which has resulted in billions of dollars of unpaid debt. Those active in the private student loan market include banks, credit unions, state agencies, nonprofit organizations, marketers, servicers, and schools themselves. Unlike federal student loans, private student loans may not include certain consumer protection features for borrowers facing hardship.
The CFPB is asking the public, students, families, the higher education community, and the student loan industry – both lenders and servicers – to provide information on this financial product voluntarily. The CFPB is interested in a complete picture of private student lending, so it is seeking a broad swath of information, including:
- Information available to shop for private student loans
- The role of schools in the marketplace
- Underwriting criteria
- Repayment terms and behavior
- Impact on choice of field of study and career choice
- Servicing and loan modification
- Financial education and default avoidance
The CFPB will use the collected input to assist with preparation of a report to Congress on private student lending. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB and the Department of Education to produce this report by July 21, 2012. The CFPB will also use the information it gathers to prioritize its own regulatory and education work.
The notice, along with information on how to electronically submit comments, is located on the CFPB’s website. The public has 60 days to submit comments after the notice has been submitted to the Federal Register.