The Consumer Financial Protection Bureau (CFPB) will explore post-secondary schools extending private loans directly to students.
“Schools that offer students loans to attend their classes have a lot of power over their students’ education and financial future,” CFPB Director Rohit Chopra said. “It’s time to open up the books on institutional student lending to ensure all students with private student loans are not harmed by illegal practices.”
The CFPB indicated it would update its exam procedures to include a new section on institutional student loans. The exam procedures inform the industry about practices that CFPB examiners will review, including placing enrollment restrictions, withholding transcripts, improperly accelerating payments, and failing to issue refunds.
The review, per the CFPB, is slated to include general lending issues, with examiners examining facts around certain actions only schools can take against students.
The CFPB cited examples of schools such as Corinthian and ITT, where the agency maintains students were subjected to high interest rates and extreme debt collection practices. Under present guidelines, schools have not historically been subject to the same servicing and origination oversight as traditional lenders, officials said.
The CFPB noted anyone seeking additional information regarding college in-house lending practices should access consumerfinance.gov/students.