House Financial Services Committee
2129 Rayburn House Office Building
Washington, D.C. 20515
October 20, 2009
Dear Chairman Frank, Ranking Member Bachus, and Members of the Committee,
On behalf of the nearly 200 national, state and local consumer, employee, investor, community and civil rights organizations of Americans for Financial Reform, we are writing to convey our strong support for the amendment to H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act, offered by Representative Maxine Waters.
The Waters Amendment requires that the CFPA should have full authority over all private student loans. Private student loans are one of the riskiest ways to pay for college, and yet a growing number of students have private student loans. Private student loans are one of the most expensive ways to pay for college. These loans lack the fixed rates, consumer protections and flexible repayment options of federal student loans, and should not be considered financial aid any more than a credit card is when used to pay for textbooks or tuition.
As of 2008, borrowing from private sources equaled about 23% of total education loan volume. Private loans grew from $3 billion in 1997-98 to $19.1 billion in 2007-08. In 2007, Fitch reported that Sallie Mae, the largest private student lender by far, relied on ABS for approximately 64.5% of its managed funding. Private Student Loans are basically unsecured debt provided to individuals with no income to support a repayment plan. The CFPA should be given every tool needed to protect our students and ensure their education leads to a brighter future.
We urge you to support the Waters Amendment.
Sincerely,
Americans for Financial Reform