Combating Predatory Lending in Higher Education Act of 2023
Impact
If passed, HB3452 would mandate the Secretary of Education to report on these newly included loans, allowing for greater transparency and insight into the default rates associated with parent and graduate loans. This measure could potentially shift how institutions manage their lending practices and may serve as a deterrent to predatory lending schemes by increasing accountability. By including such loans in the default rate calculations, the bill aims to highlight the financial strain these obligations can have not just on students but also on the families supporting them.
Summary
House Bill 3452, titled the 'Combating Predatory Lending in Higher Education Act of 2023,' aims to expand the definition of 'cohort default rate' under the Higher Education Act of 1965. The bill specifically proposes that loans made to parents on behalf of dependent students, as well as loans made to graduate students, be included in the calculation of default rates. This change is designed to provide a more comprehensive view of the loan default landscape, which is crucial for assessing the financial health of educational institutions and the impact on borrowers.
Contention
Notable points of contention surrounding HB3452 may arise from concerns about the implications of heightened reporting requirements on educational institutions. Critics may argue that mandatory reporting could burden schools, particularly smaller or underfunded institutions that already face financial challenges. Additionally, it remains to be seen how effective this bill will be in addressing concerns regarding predatory lending, as definitions and enforcement mechanisms are essential to truly combat such practices in higher education financing.