May 17, 2013
Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
RE: CFPB – 2013 – 0005 Defining Larger Participants of the Student Loan Servicing Market
Dear Ms. Jackson:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I am writing to you regarding the Consumer Financial Protection Bureau’s (CFPB) proposed rule and request for comment Defining Larger Participants of the Student Loan Servicing Market. While credit unions are specifically excluded in this rule, the private student servicing market will undoubtedly be changed by this rule. NAFCU would oppose any rulemaking that would have unintended consequences for credit union lending.
For college students in need of securing student lending beyond what is available to them through public student loans, credit unions serve as important partners. Credit unions are unique in that they are member driven not for profit institutions that develop and market products specifically to best suit the needs of their members. At credit unions, products such as private student loans are often coupled with unparalleled personal and responsible financial education that allows members to make educated decisions about what is right for them.
The National Credit Union Administration recently wrote an article in their March edition of the NCUA Report stating that the private student loan market nationwide has a total delinquency (loans past due more than 60 days) of 5.4%, while the total delinquency for credit unions is significantly lower at 1.46%. Unlike other financial institutions, credit unions are philosophically, structurally, and financially incentivized like no other financial institution to be responsive to the individual needs of its members. Credit unions work with their members to ensure they are in an appropriate product and have an interest in building a life-long financial relationship with that individual.
Private student loan servicing is a particular strength for credit unions because of the co-operative and member driven nature of the way they do business. In the 2012 Annual Report of the CFPB Student Loan Ombudsman, credit unions were lauded for the small number of complaints stemming from borrowers of private student loans and when referring to credit unions the Student Loan Ombudsman stated, “Increased participation by small financial institutions might benefit the market.” Credit unions have a responsibility to listen to their members and treat them fairly during the lending process and the servicing of those loans.
NAFCU and our members understand the importance of providing the best in student loan servicing for consumers. NAFCU appreciates the opportunity to comment. If you have any questions or concerns, please feel free to contact me at (703) 842-2212 or via email at PJHoffman@nafcu.org.
Sincerely,
PJ Hoffman
Regulatory Affairs Counsel