August 01, 2007

Committee Passes Dodd Bill to Help Students Afford College

Dodd’s Legislation to Address Problems in Private Student Loan Market Approved

Washington, D.C. – Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, today announced that the Committee passed without objection legislation introduced by Senator Dodd to help students and their families afford college. In keeping with Chairman Dodd’s commitment to preserving the American dream, the Private Student Loan Transparency and Improvement Act of 2007 would implement needed reforms in the private student lending market – the fastest-growing segment of the $85 billion student loan industry – and will help ensure that all students wishing to pursue a higher education are able to obtain the most competitive and affordable student loans. The Private Student Loan Transparency and Improvement Act would require lenders to provide more accurate and timely information to their customers about the interest rates, terms, and conditions of their products, thereby helping students better understand their financial options and obligations. The legislation will also prohibit documented practices that have harmed students and families in obtaining the most competitive and affordable student loans and requires a government study of the extent to which underwriting practices may disparately impact student borrowers and colleges on the basis of factors including race and income levels. “The ability to pursue a higher education is a fundamental element of the American dream,” said Dodd. “We must ensure that Americans have options to be able to pay for college, and I believe that private lending should be one of them. That said, I have several concerns related to the overall impact private loans have on a student’s educational and financial future, but with today’s Banking Committee passage of this legislation, we are another step closer to ensuring that students understand the products they are buying to help finance their education, and that unfair and deceptive practices in this market are outlawed. I appreciate the support of Senator Shelby and other members of the Committee on this very important piece of legislation, and I also want to acknowledge the tremendous work that has been done by Senator Kennedy, Congressman Miller, and New York Attorney General Cuomo to address the shortcomings in the federal student loan market. Chairman Dodd is leading Congressional efforts on the oversight of the private educational lending market, and has pledged to address the issue aggressively and comprehensively. At the hearing he convened in June, Chairman Dodd announced that he will convene a meeting with federal regulators on their oversight of this market. He also sent a letter along with Attorney General Andrew Cuomo to the top 20 lenders in the country requesting information on the criteria by which they underwrite their loans.
Click here for background information on Senator Dodd’s bill .