DC Shuttle: Fed Watchdog Now Accepting Complaints on Private Loans

The Consumer Financial Protection Bureau (CFPB) announced March 5 that it will now accept complaints from borrowers about problems with their private student loans. These problems could include difficulty with taking out a loan, repaying an existing loan or handling a loan which has gone into default. Under the Dodd-Frank financial reform law, the CFPB has the authority to oversee private, non-bank issuers of student loans. The CFPB’s announcement coincided with a new report from the Federal Reserve Bank of New York on total outstanding debt. According to the report, U.S. student loan debt has reached $870 billion, more than the total credit card debt ($693 billion) and total outstanding car loan debt ($730 billion).

On Thursday, the House Veterans Affairs Subcommittee on Economic Opportunity held a hearing to consider a slew of bills, including three dealing with veterans’ education benefits. The first bill (H.R. 3483) would increase the tuition benefit cap for students attending out-of-state public colleges to $17,500—the same as the cap on in-state private colleges—under the Post-9/11 G.I. Bill. The Congressional Budget Office estimates that between 25,000 and 35,000 veterans currently attend out-of-state public colleges. The second bill (H.R. 4057) would direct the Department of Veterans Affairs (VA) to develop a proposal requiring colleges to provide information and counseling to prospective students and to be more responsive to student feedback. Currently, veterans must opt in to receive counseling, and few do. Information from state oversight agencies on academics, accreditation, recruiting practices and job placement rates would also be collected and made public under the bill. The final bill (H.R. 4052) would require the secretary of Veterans Affairs to recognize colleges offering “superior services” to veterans based on criteria including graduation rates. Federal graduation rate statistics have been criticized for including only first-time, full-time students, excluding many “nontraditional” students who attend community and for-profit colleges in disproportionate numbers. New legislation (S. 2179) introduced Thursday by Sen. Jim Webb (D-VA) requiring institutions to meet Education Department eligibility requirements for federal student aid in order to receive aid from the military tuition assistance program and the G.I. Bill would also fall heavily on for-profit colleges.

As a member of New England Council, we publish the DC Shuttle each week featuring higher ed news from Washington. This edition is drawn from the Council’s Weekly Washington Report Higher Education Update, of March 12, 2012.

Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council’s mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit: www.newenglandcouncil.com.


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