The Consumer Finance Protection Bureau (CFPB) has announced its intent to look into post-secondary schools like for-profit colleges, which extend private loans to students.
According to a press release Thursday (Jan. 20), the CFPB is also updating its exam procedures, including adding a section for institutional student loans.
The exam procedures will come with information about practices that CFPB examiners will review, including placing enrollment restrictions, withholding transcripts, improperly accelerating payments, failing to issue refunds and maintaining improper lending relationships.
Per the release, the CFPB is concerned about the borrower experience with institutional loans. In the past, for-profit college students have faced high interest rates and harsh collection practices, and the release notes that schools “have not historically been subject to the same servicing and origination oversight as traditional lenders.”
“Schools that offer students loans to attend their classes have a lot of power over their students’ education and financial future,” said CFPB Director Rohit Chopra. “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 private education loans are extensions of credit made to students or parents, intended to fund undergraduate, graduate or other post-secondary education levels.
The loans can be offered by any number of institutions — banks, non-profits, non-banks, credit unions, state-affiliated organizations and institutions of higher education, including both for-profit schools and non-profit schools.
However, the loans aren’t usually associated with federal programs, and while they’re made directly to students, they’re usually referred to as institutional student loans.
The CFPB’s agenda for the 2022 year hasn’t been as clear, due to the agency’s lack of a director until October, when Chopra was sworn in.
Related: CFPB Looks Forward to Tech, After a Year Focused on Mortgages and Lending Practices
The agency said its new director “will assess further what regulatory actions the Bureau should prioritize to best further our consumer protection mission and mandate, particularly in light of the ongoing pandemic and resulting economic crisis and the Bureau’s commitment to promoting racial equity.”
Chopra’s position has seemed to be that the agency would focus on debt and the number of Americans struggling with things like rent and mortgage.
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