EFC Statement on CFPB's Report on the Private Student Loan Market

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Jul 20, 2012, 09:39 ET

WASHINGTON, July 20, 2012 /PRNewswire-USNewswire/ -- EFC commends the Consumer Financial Protection Bureau (CFPB) for differentiating nonprofit and state agency student lenders among others in the industry and noting the value and consumer-friendly nature of their alternative loan programs. According to the Bureau's report released today:

"The state program providers report that their loans are distinguished from for-profit lenders in a number of ways, including lower, fixed rates derived from tax-advantaged bond funding, lack of risk-based pricing, substantial financial counseling before and after borrowing, and 100% school certification.
One non-profit, state-affiliated lender's Public Comment included detailed information about online financial counseling required to be completed by borrowers and their co-signers prior to even paying for a loan. The lender reported that a significant number of borrowers who completed the counseling reduced their loan amount request.
Default rates for non-profit state-affiliated lenders in our data set are approximately half that of their for-profit market counterparts."

This report proves that not all private student loans are bad. In fact, it shows that loan programs offered by nonprofit and state agency student lenders are good options to consider for borrowers that need additional financing to meet the costs of college.

We strongly agree with the CFPB that there must be transparency in student loan programs. Borrowers deserve to know and understand the terms and characteristics of all education loans and what they mean for their future. EFC and its members stand ready to continue helping the CFPB improve transparency in the student loan Industry and ensure borrowers have the information and tools to make smart financial decisions.

EFC represents nonprofit and state agency student finance organizations; which operate as secondary markets, loan servicers, supplemental loan originators, and college planning resources for students and families in their states. EFC's mission of making college more affordable and accessible is realized through its members' vast college access and completion programs; provided to students, families, and schools across the nation at no cost.

CONTACT:
Samantha DeZur
(202) 955-5510

SOURCE Education Finance Council