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Media Press Releases Consumer Financial Protection Bureau Launches First-Ever Federal Inquiry into Employer-Driven Debt

Consumer Financial Protection Bureau Launches First-Ever Federal Inquiry into Employer-Driven Debt

The Action Shines a Much-Needed Spotlight on Employers’ Coercive Use of Debt to Trap Workers in Unsafe or Lower-Wage Jobs

June 9, 2022 | Washington, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) launched a first-of-its-kind federal inquiry into employers’ growing use of debt as a predatory tool to trap people in abusive jobs and poor working conditions.

In response to the CFPB’s announcement, SBPC senior policy advisor Chris Hicks released the following statement:

The American economy has long been rigged against employees at the workplace, but employers are now using debt to increase their leverage—saddling workers with a new form of shadow student debt in exchange for so-called ‘on-the-job training.’ Especially troubling is that too many employers are using this new, potent tool—Training Repayment Agreement Provisions (TRAPs)—to keep workers in substandard working conditions and low-paying jobs. Workers are being transformed into debtors and are being held hostage in their jobs because they don’t earn enough to cover the cost of quitting.

We applaud the Bureau for opening this inquiry into the new, harmful way that employers are wielding debt as a tool for workplace coercion. We urge the Bureau, and policymakers and regulators at all levels, to deploy all of the various robust tools in their arsenal to investigate this matter and aggressively enforce consumer protections where worker-consumers are being harmed.

The Consumer Financial Protection Bureau’s press release announcing their federal inquiry into employer-driven debt is available here.

A letter from Senators Brown and Murray requesting the CFPB investigate the growing use of TRAPs and additional forms of employer-driven debt is available here.


Dialogue surrounding America’s student debt crisis usually focuses on the $1.6 trillion balance of federal student loans, and sometimes on the additional $140 billion balance of outstanding private student loans. But as the Student Borrower Protection Center has documented before, there is also a “shadow” student debt market that extends beyond brand-name private student loan companies and sometimes even from the legal definition of a private education loan.

A growing body of evidence indicates that employers nationwide are increasingly utilizing shadow student debt to trap workers into unfair contracts and substandard working conditions. Training Repayment Agreement Provisions are a key mechanism that employers use to turn on-the-job education into a predatory debt trap. Simply put, TRAPs are terms tucked into workers’ employment contracts stipulating that an employer can demand repayment for the so-called cost of “training” received during the course of employment when a worker attempts to quit their job. The training in question can range from preparation for a recognized credential to extremely basic and firm-specific orientation programs.

If workers bound by a TRAP attempt to leave their jobs, the cost that they will be on the hook for can quite literally be made up by the employer, with sky-high interest rates, attorney fees, collection fees, and the ability of employers to withhold final paychecks and retirement balances added in.

The growing use of TRAPs to block workers from moving to better jobs is a consumer protection crisis for individual workers, but it is also something broader: a flagrantly anti-competitive effort by employers to hold back labor market competition. In particular, as TRAPs grow more prevalent, the chilling effect that they have on individual workers’ ability to quit their jobs cements industry-wide imbalances between labor and management across a range of professions.

To learn more about the SBPC’s work on TRAPs:


About the Student Borrower Protection Center

The Student Borrower Protection Center is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Learn more at or follow the SBPC on Twitter @theSBPC.

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