The private student loan market has seen rapid growth over the last decade. Today, student loan borrowers owe over $140 billion in private student loans. These loans often carry high interest rates and contain fewer rights and protections for borrowers than federal student loans. This market also lacks basic transparency and reporting requirements. For these reasons, borrowers face a substantially heightened risk of harm as predatory actors are allowed to flourish.
The SBPC is working to shine light on the private student loan market and expose predatory players.
The SBPC sent a letter to the CFPB warning of troubling business practices and possible borrower harm by Climb Credit, a specialty lender that provides financing for education and vocational training courses.
An SBPC investigation found that PayPal Credit, a high-cost, digital credit product, is offered by over 150 for-profit schools as a means for students to finance tuition.
This report documents the rapid growth of the private student loan market and demonstrates why there is a desperate need for accountability and reforms to protect the millions of borrowers whose lives are impacted by this market.
Private Student Loans in the News:
A nonprofit student loan watchdog is accusing private lender Climb Credit of engaging in tactics that misrepresent educational programs and projected earnings while steering borrowers towards for-profit schools, Yahoo Finance has learned.
Thirty-eight percent of students borrow additional money for college via credit cards, home equity loans and other non-student loans, according to a May 2020 report from the Federal Reserve. The SBPC has dubbed this the “shadow education finance market” because these options can lack transparency.
Over the past decade, students have borrowed more than $5 billion through an opaque web of companies to pay for training at for-profit schools, the Student Borrower Protection Center, an advocacy group, found. These products, which aren’t traditional federal or private student loans, often carry high interest rates and other risks for borrowers, according to the SBPC.