The Senate Banking Committee convened a hearing today examining potential regulatory approaches to private student loans. The CFPB has been notably active in this area (see Reports in the STUDENTLOAN series), recently presenting policy makers with recommendations on loan modification and refinance options for private student loan borrowers. Chairman Johnson (D-SD) and his Democratic colleagues all agreed on the need to assist distressed borrowers, with Sen. Brown (D-OH) announcing legislation to enable private student loan borrowers to refinance at lower interest rates. Although concern was raised on the potential systemic problems of this fast-growing market, no additional policy options were explored. Officials from the CFPB, OCC, FRB, and FDIC all testified on the characteristics of the private student loan market as well as their agencies’ involvement and surveillance efforts. Other discussion topics included co-signing for loans, borrowers’ credit histories, the scheduled interest-rate hike on federal student loans and financial literacy. This report analyzes today’s hearing.
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