U.S. consumer watchdog to scrutinize for-profit colleges’ student loan programs -Breaking
By Katanga Johnson
WASHINGTON (Reuters] – As it intensifies scrutiny of student loan industry under new Democratic leadership in the United States, the Consumer Financial Protection Bureau (CFPB), will start to examine private loans programs at for-profit colleges.
The CFPB will examine loan servicing and origination. It said that colleges which improperly speed up payments or fail to refund their students, restrict student enrollment, withhold transcripts or deny credit for debtors are among the targets.
Currently the CFPB supervises outside student loan lenders for private student loans, but it would be able to examine college private loan programs first.
If the CFPB discovers wrongdoing, this policy could be used to expose colleges to enforcement actions.
The announcement comes just as President Joe Biden’s Democratic administration seeks to fix the student loan crisis in America and increase oversight of private loan providers.
“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 high time for institutions to publish information on student lending in order to protect students who have private student loans from being harmed by unlawful practices.
Traditional lenders have never had to oversee origination and servicing of schools.
According to the CFPB, its concern stems from abuses that occurred in the 2000s when struggling students were charged exorbitant interest rates by schools and later harmed with debt collection tactics.
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