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Published: April 2013

Protecting students from predatory school loans

Consumer Action and coalition organizations respond to the Consumer Financial Protection Bureau’s (CFPB) request for information regarding an initiative to promote student loan affordability. The CFPB should be aggressive and creative in seeking solutions for these borrowers that satisfy five essential criteria needed to protect students.

Consumer Action and other advocates urge the CFPB to evaluate any proposed student loan modification program to determine whether it will – at a minimum – satisfy the following essential criteria:

1. Affordability: Loan modifications must provide a real financial benefit to borrowers and must be linked to the borrower’s realistic ability to repay.

2. Preservation of Borrower Protections: Participation in a loan modification program or acceptance of a loan modification offer should not result in a borrower losing any rights or protections she would otherwise have. This includes forbidding any waivers of rights, and ensuring income or assets of the borrower are not placed at risk.

3. Enforceability: Borrowers must have the ability to enforce their rights under the modification program, including the ability to dispute and appeal denials of eligibility and mistakes in the terms offered.

4. Efficiency and Scale: The program must be designed to reach as many as possible of the borrowers in or at risk of default, both in order to assist those borrowers directly and in order to have a positive impact on the broader economy.

5. Fairness: Any program, particularly one that relies on incentives to or purchase of loans from existing servicers and lenders, must not be a bailout or giveaway to lenders.

Lead Organization

Americans for Financial Reform (AFR)

Other Organizations

Americans for Financial Reform | Consumer Action | NAACP | National Consumer Law Center (on behalf of its low income clients) Public Citizen | The Institute for College Access and Success

More Information

For more information, please visit the AFR website.

Download PDF

Protecting students from predatory school loans   (CFPBStudentLoanCommentLetter4-13.pdf)


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