Consumer Bankers Association Private Educational Lending Principles
The Consumer Bankers Association supports the following principles relating to our private educational lending practices. We encourage students to exhaust scholarships, grants, and lower cost federally guaranteed loans before considering private education loans, and to only use private loans when federal aid is not sufficient to meet a student’s financial aid needs. We are committed to maintaining a competitive private student loan marketplace offering attractive, fair, transparent, and flexible education finance solutions to students and families. We are committed to complying with all applicable legal and regulatory requirements in marketing, originating, and servicing private student loans. This commitment begins with delivering proper consumer disclosures during each stage of the loan process. Our private educational loan programs are subject to oversight and examination by one or more of the following banking agencies: o Federal Deposit Insurance Corporation (FDIC) o Federal Reserve Bank (FRB) o Office of the Comptroller of the Currency (OCC) o Office of Thrift Supervision (OTS). Such oversight and examination includes enforcement of federal and state consumer protection requirements, including the FTC Act and other regulations involving marketing, advertising, and customer communications. We engage in responsible marketing through the presentation of accurate, transparent, and helpful information. Our marketing materials include a prominent statement encouraging borrowers to exhaust federal aid before considering private loans.
Our employees do not represent or identify themselves as employees of institutions of higher education. We do not engage in conflicts of interest in our relationships with institutions of higher education or their employees. We also support the following specific private educational loan borrower protections: o Borrowers should receive during the application process the loan terms and conditions, including the range of possible interest rates and fees, applicable to the credit they are applying for. o Borrowers should not be penalized for paying off their private loans early. o Borrowers should be educated on the benefits and drawbacks of making either full or interest-only payments while in school and on the available deferment options. o Borrowers should be encouraged to speak with their lender or loan servicer to understand the true, total costs of any potential loan forbearance or deferment. o We encourage borrowers to use financial literacy materials that will help them make good decisions about their education and how they will pay for it. The Consumer Bankers Association is the recognized voice on retail banking issues in the nation’s capital. Member institutions are the leaders in consumer financial services, including auto finance, home equity lending, card products, education loans, small business services, community development, investments, deposits and delivery. CBA was founded in 1919 and provides leadership, education, research and federal representation on retail banking issues such as privacy, fair lending, and consumer protection legislation/regulation.