Yesterday’s recess appointment by President Obama of Richard Cordray to head the new Consumer Financial Protection Bureau was applauded by groups that advocate for student financial aid.
With a director in place, the bureau can now exercise all its new powers under law. Student groups hope this means improving practices surrounding private student loans and credit cards and debit cards issued on campuses.
US PIRG, a Washington-based nonprofit, issued a press release that calls the move a bold step to protect student consumers from financial tricks and traps.
“Every year, students graduate owing tens of thousands of dollars before they’ve even earned their first paycheck. The Consumer Financial Protection Bureau can set rules of the game to rein in the worst abuses in the campus marketplace, and ultimately to drive down the cost of college,” said Rich Williams, higher education advocate for US PIRG, in a statement.
Research shows that often students take out more expensive private loans before exhausting their eligibility for federal loans with more favorable terms. Also, students are targets for high-interest, high-fee credit cards and debit cards on campus. Student groups are calling for more oversight and regulation from the new bureau to protect students on these issues.
The Project on Student Debt, an initiative of the Institute for College Access and Success in Washington, also was supportive of the president’s appointment.
“We urge the bureau to move swiftly on behalf of students and their families by taking steps such as curbing the flagrantly predatory private lending to students at some for-profit colleges; developing and enforcing sound underwriting and loan-modification standards; and requiring school ‘certification’ of all private loans to ensure that students can make informed borrowing choices,” according to a statement from the organization.
The Project on Student Debt praised the CFPB for taking steps to assist students and families, including reaching out for public comment on private student-loan practices, drafting a “Know Before You Owe”student-shopping sheet to make it easier to compare the real cost of different college options and creating a student-debt-repayment assistant do help current student-loan borrowers navigate their repayment options.
The recess appointment of Cordray while most senators were out of town but the chamber was officially in a “pro forma” session, is being called a smart political move by some. It ends the gridlock over the issue as Senate Republicans had filibustered to block the nomination. Others were critical of the administration for defying the Senate rules.