Consumer Financial Protection Agency Oversight of Career Colleges Not Needed

A massive financial services bill, containing a provision to create the Consumer Financial Protection Agency, goes to the floor next week in the House. When in the Financial Services Committee, Rep. Maxine Waters introduced an amendment that would apply CFPA oversight to career colleges making institutional loans to students (defeated 33-35). As of this writing, it is unclear whether she will re-introduce the same provision for a vote on the full House floor next week. House Education and Committee Chairman George Miller is said also to be considering his own amendment that would have all higher educational institutional loans, regardless of sector, covered by the CFPA. We opposed in Committee and continue to oppose the Waters amendment because our sector, like all of higher education, already has most of its institutional loans (effective February 2010, as required under HEOA) covered by the Truth In Lending Act (Regulation Z) with oversight by the Federal Trade Commission, plus various state consumer laws, and have seen no evidence presented that the Federal and state consumer protection/oversight system has failed in any way requiring special coverage by CFPA. We also object to the fact that our sector is singled out by the Congresswoman’s amendment.

Other groups are joining the fray, including U.S. Public Interest Research Group (PIRG). U.S. PIRG just issued a report that is factually inaccurate in several important ways, including their fundamental mistake claiming that our sector’s institutional loans are somehow subject to less oversight than loans issued by other sectors of higher education, which is simply untrue. They also fail to mention that most institutional loans are covered by TILA and state consumer laws. Either they are terribly misinformed, or are intentionally trying to mislead people. Someone needs to call them on that.