In a letter, the Student Borrower Protection Center, Americans for Financial Reform Education Fund, the California Reinvestment Coalition, the Center for Responsible Lending, Consumer Reports, and the National Consumer Law Center urge the Office of the Comptroller of the Currency (OCC) to carefully scrutinize the “partnership” between Blue Ridge Bank, a federally chartered national bank, and MentorWorks, a student financing company that offers Income Share Agreements (ISAs). Representations on MentorWorks’s website indicate that Blue Ridge Bank originates ISAs on MentorWorks’s behalf. As the advocates’ letter describes, such a partnership is likely to put student loan borrowers at risk and appears not to fit within the OCC’s stated guidelines for risk management around new bank products and services.
ISAs are a risky form of student financing that ties students’ loan payments to their future wages. Despite industry’s branding, it is now well documented that these products and the companies that tout them have a track record of deploying deceptive business practices and driving disparate impacts that harm students of color, all while claiming they don’t need to comply with federal and state consumer protection laws. With the ISA market growing rapidly and companies in the space pushing the product ever more aggressively, it is critical that regulators step off the sidelines and ensure that ISA companies are acting in accordance with existing laws and regulations.
Read the Letter: Advocates Letter to the OCC on MentorWorks
Read the Blog: It’s Time for Regulators to Scrutinize ISA Companies’ Emerging Rent-a-Bank Schemes