Last week the House of Representatives passed the Wall Street Reform and Consumer Protection Act (HR 4173), a comprehensive set of measures that will modernize America’s financial regulations and hold Wall Street accountable. The bill creates the Consumer Financial Protection Agency (CFPA), a new federal agency devoted to protecting Americans from unfair and abusive financial products and services. USSA worked with several coalition partners to ensure that private student loans were among the financial products under the jurisdiction of the CFPA.
Additionally, HR 4173 strengthened private loan certification laws that were enacted with the reauthorization of the Higher Education Act in 2008. These measures include:
•Ensuring students have talked with a financial aid officer about other options before taking out private loans. Educating students about their eligibility for federal loans is crucial because many students don’t take full advantage of the lower-interest rates and flexible repayment plans of federal loans.
•Requiring that loans do not exceed the cost of attendance, which is an important component in curbing the rising level of student debt.
Students are thrilled about these provisions. “We applaud the House for passing strong protections for students from private lenders who often use manipulative tactics to profit off young people,” said Daniel Ramos, a student at the University of Colorado, Boulder and member of the USSA Board of Directors.
The Senate version of the bill is currently being drafted. USSA and students across the country will advocate for the inclusion of essential safeguards against arbitrary and manipulative private lending practices that have greatly contributed to the skyrocketing level of student debt.