CBA Writes Committee in Advance of Legislative Markup

December 10, 2019
Allison Heimberg

CBA Writes Committee in Advance of Legislative Markup

 

WASHINGTON, D.C. – The Consumer Bankers Association today wrote the Chair and Ranking Member of the House of Representatives’ Financial Services Committee to offer comments on several pieces of legislation the committee is considering. The letter addresses concerns with the Private Loan Disability Discharge Act (H.R. 4545), Student Borrower Protection Act of 2019 (H.R. 5294) and Protecting Your Credit Score Act of 2019 (H.R. 5332).

 

Private Loan Disability Discharge Act (H.R. 4545):

 

The Private Loan Disability Discharge Act is unnecessary and would complicate the process currently utilized by individual banks when discharging these loans. CBA member banks forgive loans for borrowers affected by total and permanent disability, along with the co-signers. CBA bank lenders also forgive loans of borrowers and co-signers in case of death of the student borrower and did so before it was mandated under enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Pub. L. 115-174) last year. We appreciate and agree that borrowers with total and permanent disabilities deserve assistance, but legally mandating an already well-established business practice only adds inefficient and unnecessary compliance costs.

 

Student Borrower Protection Act of 2019 (H.R. 5294):

 

The letter encourages policymakers to address the root cause of student debt: the cost of college and federal over-lending. Improved up-front and ongoing disclosures about the terms and conditions of federal loans are a first step. “The federal government has an obligation to provide access to higher education but is not helping students and families by making loans they cannot repay,” said CBA President and CEO Richard Hunt. “A 98 percent successful repayment rate shows that banks are making responsible loans that borrowers can repay, and that private sector financial counseling and servicing standards are working.”

 

In the letter, CBA writes, “H.R. 5294 attempts to create solutions to problems that do not exist. There is simply no evidence to support H.R. 5294’s mandate to the CFPB to upend existing processes by redesigning banks’ billing statements. Duplicating requirements already in law and mandating routine business practices into federal statute, will decrease flexibility to lenders who strive to meet a borrowers needs by requiring regulators and stakeholders to undertake an unnecessary, ridged and lengthy rulemaking process that will raise costs, slow innovation and complicate a well-functioning customer service process.”

 

Protecting Your Credit Score Act of 2019 (H.R. 5332):

 

CBA opposes the Protecting Your Credit Score Act of 2019. Section 5 of the bill, “Injunctive Relief for Victims,” is especially concerning because it undermines the CFPB and Federal Trade Commission’s (FTC) primary authority to enforce the Fair Credit Reporting Act (FCRA) in a manner consistent with maintaining a nationwide credit reporting system that benefits businesses and consumers. Congress enacted FCRA in 1970 with emphasis on ensuring fairness, accuracy, and efficiency within the banking system, and in doing so specifically granted the federal regulators alone the right to pursue injunctive relief for violations, thus avoiding the possibility of multiple courts issuing conflicting orders.

 

A copy of CBA’s letter to the committee is available here.

 

To learn more about CBA’s work to improve the student loan marketplace, please visit ConsumerBankers.com/EducationFunding.  

 

To help ensure the federal government responsibly serves those with the most need and takes steps to begin reducing the cost of college, CBA has recommended the following measures:

 

  • Increasing the availability of Pell Grants;
  • Ending unlimited PLUS loan borrowing to help reduce tuition increases;
  • Implementing “Know Before You Owe” disclosures to clearly explain the terms of federal loans;
  • Renaming so-called “Award” letters provided by colleges to the more accurate “Financing” letters and having them clearly differentiate loans from grants and scholarships;
  • Requiring school certification of private education loans;
  • Utilizing economist-preferred fair value accounting to show the true cost of federal student loans; and
  • Requiring detailed public reports on the performance of the federal government’s direct loan portfolio.

 

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About the Consumer Bankers Association:

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.