CUNA Comment Letter

Proposed Rules for Student Loans.

August 24, 2009

Ms. Pamela Moran
U.S. Department of Education
1990 K Street, NW
Room 8033
Washington, DC 20006-8502

RE: Department of Education Student Loan Proposal

Dear Ms. Moran:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the proposed rule that will amend the Federal Perkins Loan (Perkins) Program, the Federal Family Education Loan (FFEL) Program, and the William D. Ford Federal Direct Loan (Direct Loan) Program. These revisions implement amendments to the Higher Education Act of 1965, as required by the Higher Education Opportunity Act of 2008. By way of background, CUNA is the largest credit union advocacy organization in this country, representing approximately 90% of our nation’s 8,000 state and federal credit unions, which serve 92 million members.

Summary of CUNA’s Comments


The proposed rule results from a negotiated rulemaking process that included representatives from various organizations, institutions of higher learning, and lenders. CUNA appreciates that several credit union representatives participated in this process.

Although the proposal will result in new disclosure requirements for lenders participating in these student loan programs, CUNA does not have significant issues to raise, both because these are statutory requirements that the DOE must implement and because credit unions were involved in the process of developing these rules and provided substantial input in the drafting process.

However, as with all substantial, new disclosure requirements, credit unions that participate in these loan programs will need substantial time to prepare the appropriate disclosures, provide appropriate staff training, and implement the necessary data processing changes. For these reasons, we urge DOE to allow one year for lenders to comply after the final rule is issued.

On a related issue, CUNA is very concerned with H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009, which would eliminate the FFEL Program. Currently, over 1,000 credit unions provide their members student loans through this program. A small number of these credit unions, primarily with university-based fields of membership, have significant concentrations in student lending. Credit unions that specialize in student lending provide a high quality service for their student members and can provide much needed and individualized assistance if difficulties arise with regard to loan repayments. The elimination of FFELP will remove this valuable option for students.

We understand that this legislation is intended to address inefficiencies in the student lending market. However, credit union members value the important service that is provided by those credit unions that participate in this program. For these reasons, we urge the Obama Administration to reconsider its support for the elimination of the FFEL Program.

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Thank you for the opportunity to comment on the proposed rule that will amend the Perkins, FFEL, and Direct Loan Programs. If you have questions about our comments, please contact Senior Vice President and Deputy General Counsel Mary Dunn or me at (202) 638-5777.


Jeffrey P. Bloch
Senior Assistant General Counsel