Higher Education Facing Scrutiny From CFPB

From: Subject to Inquiry

By Susan C. Rodriguez

Colleges, universities and anyone offering postsecondary education, take note: The Consumer Financial Protection Bureau (CFPB) continues to target alleged unfair and deceptive practices related to the student loan and financial aid process. A few weeks ago, the CFPB filed suit against Corinthian Colleges in U.S. District Court for the Northern District of Illinois, alleging violations of the Consumer Financial Protection Act of 2010 (CFPA) by:

induc[ing] students to enroll in its programs through false and misleading representations about its graduates’ career opportunities, including representations suggesting Corinthian would provide assistance in helping students find a job, and that students were likely to obtain a permanent job upon graduation.1

According to the complaint, Corinthian allegedly inflated its job placement rates and induced students to sign up for private student loans with substantially higher interest rates.2 The CFPB also asserts that school staff used unacceptable tactics in collecting on past-due loan amounts, including pulling students from class, preventing registration and terminating computer access.3

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