June 08, 2007

Chairman Dodd Unveils Plan to Help Students Afford College

Announces Legislation to Address Problems in Private Student Loan Market

Washington, D.C. – Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, today announced that he will introduce legislation to help students and their families afford college. Chairman Dodd’s legislation would implement needed reforms in the private student lending market – the fastest-growing segment of the $85 billion student loan industry – and will help ensure that all students wishing to pursue a higher education are able to obtain the most competitive and affordable student loans. The Private Student Loan Transparency and Improvement Act would require lenders to provide more accurate and timely information to their customers about the interest rates, terms and conditions of their products, thereby helping students better understand their financial options and obligations. The legislation will also prohibit documented practices that have harmed students and families in obtaining the most competitive and affordable student loans.
    “The ability to pursue a higher education is a fundamental element of the American dream,” said Dodd. “We must ensure that Americans have options to be able to pay for college, and I believe that private lending should be one of them. That said, I have several concerns related to the overall impact private loans have on a student’s educational and financial future. When lenders approach students – their potential customers – are they presenting them with all the facts, in clear language that 18-year-olds can understand and agree to? Are they treating their prospective customers fairly and independent of where they attend school and where they live? I fear that in some cases, perhaps many, the answer to these questions may be ‘no’ – which is simply unacceptable. This legislation will help to ensure that students understand the products they are buying to help finance their education, and that unfair and deceptive practices in this market are outlawed. Finally, I want to acknowledge the tremendous work that has been done by Senator Kennedy, Congressman Miller, and Attorney General Cuomo to address the shortcomings in the federal student loan market – my efforts today serve to complement theirs.” “I commend Senator Dodd for crafting a thoughtful and thorough legislative response to the deceptive and illegal practices uncovered by my office as part of our investigation into the private student loan market,” said New York Attorney General Andrew Cuomo. “This bill will go a long way to taming the wild west of the student loan industry. The bill prohibits the most egregious industry practices and seeks to deter discriminatory lending and underwriting practices. The problems we have found in the student lending industry are nationwide in scope and demand a federal solution. I also commend Senator Kennedy and Congressman Miller who, like Senator Dodd, are working to pass legislation that will help and protect students and parents across the country.”
Chairman Dodd is leading Congressional efforts on the oversight of the private educational lending market, and has pledged to address the issue aggressively and comprehensively. At the hearing he convened on Wednesday, Chairman Dodd announced that he will convene a meeting with federal regulators on their oversight of this market. On Thursday, he sent a letter along with Attorney General Andrew Cuomo to the top 20 lenders in the country requesting information on the criteria by which they underwrite their loans.
Click here for background information on Senator Dodd’s bill .