Reply to CFPB Request for Information Regarding an Initiative to Promote Student Loan Affordability
April 2, 2013
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552
RE: Docket No. CFPB–2013–0004
Dear Ms. Jackson:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I write to you regarding the Consumer Financial Protection Bureau’s (CFPB) Request for Information Regarding an Initiative to Promote Student Loan Affordability.
Student loans offer students a way to obtain an education when payments for tuition and other expenses are out of immediate reach. While public student lending should be the first avenue for consumers looking for help to fund their education, public student loan programs do not always cover all of the expenses required for college education. For college students in need of securing stu dent lending beyond what is available to them through public student loans, credit unions serve as important partners. Credit unions are unique in that they are member driven not for profit institutions that develop and market products specifically to best suit the needs of their members. At credit unions, products such as private student loans are often coupled with unparalleled personal and responsible financial education that allows members to make educated decisions about what is right for them.
The National Credit Union Administration recently wrote an article in their March edition of the NCUA Report stating that the private student loan market nationwide has a total delinquency (loans past due more than 60 days) of 5.4%, while the total delinquency for credit unions is significantly lower at 1.46%. Unlike other financial institutions, credit unions are philosophically, structurally, and financially incentivized like no other financial institution to be responsive to the individual needs of its members. Credit unions work with their members to ensure they are in an appropriate product and have an interest in building a life-long financial relationship with that individual.
The Bureau is also actively seeking information about private student loan servicing. This is a particular strength for credit unions because of the co-operative and member driven nature of the way they do business. In the 2012 Annual Report of the CFPB Student Loan Ombudsman, credit unions were lauded for the small number of complaints stemming from borrowers of private student loans and when referring to credit unions the Student Loan Ombudsman stated, “Increased participation by small financial institutions might benefit the market.” Credit unions have a responsibility to listen to their members and treat them fairly in both lending and servicing.
While credit unions as an industry are united by a focus on their members, each credit union and its members are different. Some credit unions have unique relationships with universities because their field of membership includes students, faculty and alumni from those institutions. Other credit unions don’t have direct relationships with universities but may have a member with a son or daughter who is thinking about going to college. We urge the CFPB to think seriously before introducing any proposal that applies a one size fits all approach to private student lending without giving credit unions the flexibility to best serve their members.
NAFCU and our members understand the importance of providing credit and responsible financial education for its members. NAFCU appreciates the opportunity to comment. Should you have any questions, please feel free to contact me at PJHoffman@nafcu.org or (703) 842-2212.
Regulatory Affairs Counsel
National Association of Federal Credit Unions