Financial News Story of the Day – Students More Protected from Predatory Lending Practices
Student loan debt might very well be the next bubble to pop following housing. Today, President Barack Obama announced that Richard Cordray will head the new Consumer Financial Protection Bureau (CFPB), a different type of government agency tasked with protecting consumers from predatory lending. Most of the higher tuition costs affecting students nationally can be attributed to continuing public and private student loans being made to those who have very little chance of actually repaying them. Saddled with an average of $25,000 or more in debt each year, graduating students are facing higher default rates along with stiffer labor competition due to the ongoing recession. Student loan debt cannot be discharged through bankruptcy, causing some to advise younger students to put school tuition on credit cards rather than take out loans. While the CFPB is a good step in the right direction, ratings agencies failed miserably to regulate the mortgage loan market so they can easily fail again (source: HuffingtonPost.com).
Excerpt: “Even worse, hundreds of thousands of students also assume expensive private student loans before exhausting more consumer-friendly college financing options. Private student loans pile more debt on students because they provide the worst rates and terms to students with the greatest financial need. In addition, students are targets for high interest, high-fee credit cards and debit cards on campus.”
Daily Finance Summary – Student Loan Reform, and First Stock Losses
- President Obama announced greater powers for the CFPB to protect student borrowers from predatory lending
- The Dow Jones saw its first negative day of 2012
- Gas prices started the year higher than any previous January
- Chinese citizens are protesting housing troubles in the country