Rep. Katie Porter Renews Legislative Push to Better Protect Student Borrowers
Congresswoman’s bills would bolster student loan watchdog, improve data on student loan defaults, and crack down on fraudulent for-profit universities
Washington, May 11, 2022
WASHINGTON—Congresswoman Katie Porter (D-CA) today reintroduced a slate of bills to boost accountability in higher education. The CFPB Student Loan Integrity and Transparency Act, co-led by Congresswoman Suzanne Bonamici (D-OR), would restore critical oversight powers to the top government official responsible for assisting student borrowers, while the Accountability in Student Loan Data Act would improve reporting requirements on student loan defaults. Porter also reintroduced legislation to improve oversight of fraudulent for-profit universities.
“Our economy can’t be globally competitive if students have to choose between furthering their education and lifelong financial stress,” said Porter, Co-Chair of the House College Affordability Caucus and former professor at the University of California, Irvine. “We can better protect students from predatory lenders, scams, and for-profit universities—and that starts with giving federal watchdogs the tools they need to hold bad actors accountable.”
The CFPB Student Loan Integrity and Transparency Act would re-empower the Consumer Financial Protection Bureau (CFPB)’s student loan ombudsman, an official whose oversight capabilities were severely undermined in 2018 when the Trump Administration closed the Office of Students and Younger Consumers. Porter’s legislation would support the top official charged with protecting student borrowers by maintaining adequate staffing and resource levels, requiring information sharing between the Department of Education and the CFPB, and mandating cooperation from student loan servicers.
“Students work hard for a better future by pursuing higher education, but too often their educational journey involves dealing with unscrupulous lenders or deceptive loan terms,” said Bonamici. “With the CFPB Student Loan Integrity and Transparency Act, the Consumer Financial Protection Bureau will have additional authority and power to advocate for students and provide needed oversight. I am pleased to join Rep. Porter in this important effort.”
The CFPB Student Loan Integrity and Transparency Act is supported by the Student Borrower Protection Center, Consumer Federation of America, National Consumer Law Center, Student Debt Crisis Center, Americans for Financial Reform, and Center for Responsible Lending.
“The story of the student debt crisis is one marked by widespread economic distress, government inaction, corruption, and shocking abuses by some of the largest financial companies in the world,” said Mike Pierce, Executive Director of the Student Borrower Protection Center and the former regulator for the student financial services industry at the Consumer Financial Protection Bureau. “Big private companies who choose to do this work on behalf of taxpayers routinely break the law. This critical legislation will ensure that the CFPB has the tools to put borrowers back at the center of the Bureau's consumer protection work.”
Porter’s Accountability in Student Loan Data Act would improve reporting requirements for colleges and universities on graduates who default on their student loans. Under the current system, institutions can escape accountability by artificially deflating the number of individuals who can’t repay their loans. Porter’s bill changes how government agencies calculate the default rate and creates penalties for institutions with a high percentage of graduates who default.
The Accountability in Student Loan Data Act is endorsed by the Center for Responsible Lending, Americans for Financial Reform, and the Student Debt Crisis Center.
“We must have accurate data to ensure that for-profit educational institutions are accountable for serving the needs of students who seek loans to pursue higher education,” said Jaylon Herbin, outreach and policy manager at the Center for Responsible Lending. “We should not let these schools game the system by manipulating data about how many students are defaulting on their loans.”
Porter also reintroduced legislation to increase oversight of predatory for-profit universities that face financial downturns. Current law allows these institutions to get away with cheating students by entering into receivership status, rather than declaring bankruptcy. Porter’s legislation would close this loophole by allowing the Department of Education to evaluate the standing of institutions under receivership to receive federal financial aid.
A lifelong consumer advocate, Porter has consistently pushed to protect student borrowers and drive down the sticker price of higher education. She introduced bipartisan legislation to extend student loan relief to the nearly 2 million borrowers excluded from the CARES Act. She also backed legislation to make a student loan forgiveness program permanent for borrowers who were defrauded or misled by their schools, as well as a bill to protect student borrowers and increase transparency and accountability within the student loan servicing industry.