A Consumer Bankers Association (CBA) official testified last week before the District of Columbia City Council Committee on Business and Economic Development to oppose a proposal the organization says would restrict access students with higher education options.
DC’s legislative proposal titled New Student Loan Borrower Bill of Rights Amendment Act of 2021 (B-170) was established to add protections to student loan borrowers and prohibit unfair, deceptive, or abusive acts and practices. However, the chair of the CBA education finance committee and head of student loans for Citizens Bank, Christine Roberts, said during the hearing that this would remove an education finance option and put it at a disadvantage. DC students both at home and when registering out of state. She said it would also discourage out-of-state students from enrolling in DC colleges and universities that cannot offer the same funding options as other institutions.
“Unfortunately, our ability to continue to provide low cost private education loan options to DC students attending colleges in your state and beyond will be compromised by the B-170 as currently drafted.” said Roberts.
Roberts said the B-170 would limit the ability of banks to provide loans to DC while potentially increasing the likelihood of borrowers defaulting by imposing “new rigid and unenforceable rules” on how and when private lenders to education can free co-signers from their loan obligations.
â97% of private student loans granted by citizens and our competitors are repaid on time with a default rate of 1.3%. This reflects the positive contribution of the private sector in helping DC students finance their education while providing manageable repayment options, âshe said.
Of the more than $ 1.7 trillion in outstanding student debt, about eight percent, or $ 136 billion, is held by private lenders. The remainder – about 92 percent – is owned by the federal government. Roberts said most cases of students struggling with student debt are for federal loans, while loans from private sector lenders are working well.
“At a minimum, banks should be exempted from this legislation to eliminate unenforceable conflicts with federal regulations, as has been done with private student loan laws in states such as Virginia, Illinois and Massachusetts.” said Robert.