The Consumer Financial Protection Bureau has announced they are taking a look at issues surrounding private student loans.
The CFPB is asking for feedback on “private education loans and related consumer financial products and services that are currently being offered to or used by students and their families for the financing of postsecondary education.”
The CFPB encourages the early submission of comments. All submissions must include the document title and docket number. Please note the number of the question to which you are responding at the top of each response (respondents need not answer each question). In general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street, NW, Washington, DC 20006, on official business days between the hours of 10:00 AM and 5:00 PM Eastern Time. You can make an appointment to inspect the documents by telephoning 202-435-7275. All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information such as account numbers or Social Security numbers should not be included. Comments will not be edited to remove any identifying or contact information.
This action by the CFPB may eventually lead to some action to help prevent student from being trapped in private student loans in the future.
“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 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.