An official from the Consumer Bankers Association (CBA) testified last week before the District of Columbia City Council Committee on Business and Economic Development in opposition to a proposal that the organization said would limit students’ access to higher education options.
The DC legislative proposal called the New Student Loan Borrower Bill of Rights Amendment Act of 2021 (B-170) was established to add protections for student loan borrowers and prohibit unfair, deceptive, or abusive acts and practices. However, CBAʻs Education Funding Committee Chair and Head of Student Lending for Citizens Bank Christine Roberts stated at the hearing that it would take away an education financing option and put DC students at a disadvantage both at home and when enrolling 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 elsewhere will be jeopardized by B-170 as currently drafted,” Roberts said.
Roberts said B-170 would limit banks’ ability to provide loans in DC while potentially increasing borrowers’ likelihood of default by imposing “rigid and unworkable new rules” on how and when any private education loan lenders can release cosigners from their loan obligations.
“97 percent of private student loans made by Citizens and our competitors are being repaid on time with a default rate of 1.3 percent. This reflects the positive contribution the private sector is making to help DC students finance their education while providing manageable repayment options,” she said.
Of the more than $1.7 trillion in outstanding student loan debt, about eight percent, or $136 billion, is held by private lenders. The rest — about 92 percent — is held by the federal government. Roberts said that most of the cases of students struggling with student loan debt involve federal loans, while loans given by private sector lenders are performing well.
“At a minimum, banks should be exempted from this legislation to eliminate unworkable conflicts with federal regulations as has been done with private student loan legislation in states such as Virginia, Illinois, and Massachusetts,” Robert said.