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View from CBA September 6, 2013
Another Private Lender Vacates Student Loan Market
Yesterday's news that another retail lender was leaving the student loan business is exactly the result the Administration and those Members of Congress desired when they orchestrated a federal government takeover of the student lending market. Like many government programs, the result has been disastrous. College costs have continued to rise and competitors have left the market place.
The Federal Government now controls 93% of the market and taxpayers are on the hook for over $1 Trillion in federal student debt - more debt than any consumer product but mortgages. Even worse, their 3-year default rate has increased to 13%, several times higher than the rate of CBA member banks. Still there are no meaningful underwriting standards to limit over borrowing and Congress has yet to address ways to make college more affordable. Talk about irresponsible.
Yes, Congress has increased Pell grants a few hundred dollars and interest rates for all federal loans were just reduced but the main driver of student debt is college tuition and fees, which have increased an average of 5.4% each year since 2001.
CBA has been out front during these tough economic times. Led by the CBA Education Funding Committee, we have worked with regulators and asked for repayment option flexibility for recent graduates. We’ve held nearly a half dozen “Advocacy Days” on Capitol Hill to talk with lawmakers about private student loans and the tough decisions students and families have to make. These are critical issues and CBA will remain active in tackling them head on.
CFPB Names Antonakes Deputy Director
On Wednesday, the CFPB officially named Steven Antonakes deputy director. He had been serving as the bureau’s acting deputy director. His background as a career bank examiner and as the Commissioner of Banks for the Commonwealth of Massachusetts provides the CFPB with the needed expertise to finally level the playing field between banks and non-banks as mandated by Dodd-Frank.
Branch Debate Continues
We Southerners, through laziness or heat, loathe to get out of the car; whether getting a burger at Sonic, or making a transaction at the bank. Imagine my interest when Bank of America announced they were closing some of their drive-thru windows. One consultant stated that 54% of customers regularly use ATM’s at the drive-thru. But that percentage is going to change – soon. Really soon. CBA has been front and center at America’s movement toward new technology – and it’s not just “the kids” leading the revolution. Bank of America has pointed out that 13 million customers used their smartphones to deposit an average of 160,000 checks, per day.
Remember what TRU’s Katie Sacksteder said at CBA LIVE 2013: A millennial still values a relationship with their bank – it’s just a different type of relationship than older generations are accustomed.
We’re excited to announce AOL is our 8th new associate member for 2014. I would like to thank Paul Kadin, AOL’s Category Development Officer, for working with CBA to grow our membership.