CBA Warns of Problems Ahead for Students and Parents Under Conference Agreement

"H.R. 2669 will come to be viewed as irresponsible legislation that undermined rather than expanded college opportunity."

Joe Belew, President  
Consumer Bankers Association  

ARLINGTON, VA, September 5, 2007- The Consumer Bankers Association (CBA) issued the following statement after release of details on the conference agreement on H.R. 2669, the student loan budget reconciliation bill. The statement is from CBA President Joe Belew:

"Today House and Senate conferees announced an agreement that will hurt student loan borrowers. Make no mistake. Because of the unwise and excessive budget cuts to the Federal Family Education Loan Program in the bill, most students and parents will find fewer borrower benefits and will pay more for their loans. Inevitable cuts in critical customer support will mean less service, more confusion and more difficulty for students and parents when applying for financial aid.

"The conferees have also adopted a student loan auction model that will negatively affect all parents borrowing under the PLUS loan program. The two lowest bidders in each state will make all PLUS loans in that state. That means every parent will be limited to the two lenders selected by an auction. They will have no option to consider service as well as cost, or to borrow from their bank of choice. In addition, borrower benefits in the PLUS program will almost certainly deteriorate as a result of the auction, further burdening financially pressed parents who will be forced by the government to pay still more.

"H.R. 2669 will come to be viewed as irresponsible legislation that undermined rather than expanded college opportunity. CBA entreats Members of the House and Senate to vote against the conference agreement," Mr. Belew stated.

For ninety years the Consumer Bankers Association has been the recognized voice on retail banking issues in the nation’s capital. Member institutions are the leaders in consumer financial services, including auto finance, home equity lending, card products, education loans, small business services, community development, investments, deposits and delivery.

CBA was founded in 1919 and provides leadership, education, research and federal representation on retail banking issues such as privacy, fair lending, and consumer protection legislation/regulation. CBA members include most of the nation’s largest bank holding companies as well as regional and super community banks that collectively hold two-thirds of the industry’s total assets.