United States: CFPB to review college lending practices
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On January 20, the CFPB announcement that it would begin reviewing the operations of post-secondary schools that offer private loans directly to students and update its review procedures to include a new section on institutional student loans. The CFPB stresses its concern about the experience of student borrowers in light of allegations of past abuse at schools who were before for follow-up by the CFPB for unfair and abusive practices in their internal private lending programs.
When reviewing institutions offering private education loans, in addition to looking at general loan issues, CFPB reviewers will consider the following areas:
- Imposing enrollment or attendance restrictions on students with late payments;
- Retain transcripts;
- Acceleration of payments;
- Not issue refunds; and
- Maintaining inappropriate loan relationships
This announcement was accompanied by a brief remark from CFPB director Chopra: “Schools that offer students loans to attend their courses have a lot of power over the education and financial future of their students. It is time to ‘open the books on institutional student loans to ensure all students with private student loans are not harmed by illegal practices.’
Put into practice : The CFPB’s concern with the experience of student borrowers is consistent with a number of enforcement actions taken by the Bureau against post-secondary schools. the student loan review procedures manual is intended for use by Office reviewers and is available as a resource for those subject to its reviews. These procedures will be incorporated into Office policy. General Supervision and Review Manual.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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