The Consumer Bankers Association (CBA) has outlined a series of reforms the organization said reduces student debt while also protecting borrowers.
According to the CBA, initiatives include reining in unlimited federal government lending the organization maintains drives up higher education costs.
In correspondence forwarded to the Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy in advance of its hearing on student loan debt, CBA President and CEO Richard Hunt indicated the domestic student debt problem is caused by unlimited lending by the federal government and the resulting constantly increasing prices charged by schools.
“The best way to reduce excessive student loan debt is to restrain the federal lending that is fueling the excess,” Hunt wrote. “Federal student loan debt has ballooned in large part because many borrowers are not making progress repaying what they borrowed. In contrast, private student loan borrowers are successfully repaying their loans 98 percent of the time. This successful repayment rate has persisted year after year, only dropping slightly during the COVID-19 pandemic-affected months 2020 and already recovering this year.”
Hunt said federal law allows for open-ended borrowing of PLUS loans by graduate students and parents of undergraduates, limited by what schools decide to charge.
The CBA solutions include changing the Higher Education Act to limit PLUS borrowing and otherwise encourage colleges to restrain their costs; improving disclosure of terms and conditions for federal loans, like those required for private loans by the Truth in Lending Act; taking into some consideration students’ and families’ ability to repay before saddling them with significant debt they may not be able to repay.
The post Consumer Bankers Association outlines student loan debt solutions appeared first on Financial Regulation News.