WASHINGTON (4/10/13)--Following up on a recent meeting with the Consumer Financial Protection Bureau, the Credit Union National Association in a comment letter emphasized that credit unions should be given greater latitude to provide student loans to their members.
Many credit unions are growing their student lending programs, and CUNA Deputy General Counsel Mary Dunn noted that 600 credit unions currently offer private student loans to their members. "Like the CFPB, these credit unions want to ensure they provide products on favorable terms and that their members understand their responsibilities under student loan agreements--as credit unions do with other loan products they offer," Dunn wrote.
Recent CFPB data has shown that 87% of student lending complaints the agency has received originated from consumer dealings with seven firms, none of which were credit unions. "In fact, as the report indicates, out of the approximately 3,500 complaints about student loans, only one involved a credit union, and it is our understanding that the complaint has been satisfactorily resolved," Dunn added.
Dunn urged the CFPB to "recognize that there is no record of abuse by credit unions in this area of activity that would justify the imposition of additional regulations on credit unions."
The CUNA comment letter also recommends changes that could "help remove legal and other barriers that will enable credit unions to make even more student loans, consistent with their members' needs for such lending, current legal requirements, and reasonable safety and soundness considerations."
Extending the 15-year student loan maturity limit imposed by the Federal Credit Union Act is one such fix, Dunn said. Giving credit unions greater leeway to work with student loan borrowers and adjust the terms of their loans, as needed, could make monthly payments more manageable for borrowers and help credit unions minimize delinquencies or even charge offs, she wrote. CUNA has suggested this change to Congress and also intends to work with the CFPB and National Credit Union Administration to pursue this regulatory relief, she added.
Dunn also called on the CFPB to work with the NCUA and other financial regulators to ensure that credit unions and other creditors can offer student loan modifications, when needed, to their borrowers.
CUNA is forming a student loan advisory group to address these and other student lending issues, and that group plans to meet with officials from the CFPB and the NCUA, she added.
For the full CUNA comment letter, use the resource link.