Consolidating Student Loans

A recent vote by the House Financial Services Committee has approved the Consumer Financial Protection Agency Act of 2009 (H.R. 3126). The federal Consumer Financial Protection Agency (CFPA) would regulate the nation’s financial industries, including that of private student loan lending.

If you know anything about private student loans, you know that the interest rates of private loans are variable and can fluctuate greatly. The CFPA would oversee the private student loan lending industry to help eliminate “unfair, deceptive, or abusive” practices by lenders. Of course, this is a great win for college students who are increasingly forced to supplement their federal student loans with private loans in order to pay for the rising costs of attending college. Banks, on the other hand, strongly opposed the idea of having the federal government regulate the private financial sector.

The CFPA should help private student loans to become much more affordable for students by increased federal regulation aimed at eliminating deceptive tactics, offering fixed interest rates, outlawing deceptive marketing tactics and other unfair business practices. In addition to private student lending, the CFPA will also monitor other financial industries, including the mortgage and credit card industries.

H.R. 3126 is a key component of President Obama’s plan to regulate the nation’s financial system. Abusive lending is one of the biggest reasons the U.S. Economy is in such a slump, and the CFPA will hopefully provide an added layer of protection against future recessions. It should also help student loans become more affordable, which is a good thing considering that a good education is so important to our future.

Source: L.A. Times

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