WASHINGTON (3/19/13)--Noting that credit unions are natural partners for higher education institutions seeking to provide the most cost effective, student focused financial services to their students, the Credit Union National Association urged the Consumer Financial Protection Bureau to avoid imposing any new student lending regulations on credit unions.
CUNA Assistant General Counsel Lance Noggle in a Monday comment letter noted there are several cases in which financial institutions partner with an institution of higher learning. However, Noggle wrote, "Financial institution partners may be chosen more for the financial benefits provided to the school rather than their willingness to provide low cost financial services to students.
"Fees paid by financial institutions to colleges and universities may be used to subsidize services and products such as financial aid disbursement accounts and student ID cards that act as debit cards; however, this arrangement comes at a cost to students that is often hidden and opaque," he added.
"The more that a financial institution is willing to pay for access and marketing to students, the more likely it is to design products that generate cash flows funded by students…Unlike for-profit institutions, credit unions exist to serve their members, including students, and not to extract profits from them," Noggle said.
CUNA in the comment letter also answered basic CFPB questions about student lending, including:
How cards or other products are offered to students;
What are the features of the different types of financial products and services that banks and credit unions offer to students;
What kind of campus affinity products are being offered to students;
How campus-affiliated products are marketed to students; and
What information about students is provided by institutions of higher education to financial institutions.
The CFPB is working to address a number of student loan issues, and is currently accepting comment from students, parents, lenders and educators on financial services specifically marketed to higher education students. The agency last week also released a proposed rule that would place any nonbank student loan servicer that handles more than 1 million borrower accounts under CFPB supervisory authority.
For CUNA comment letters, use the resource link.