Regulators, students, economists and lenders are all talking about student loans. To underscore the renewed interest in consumer protections for student loan products, the CFPB recently announced it has filed its first public enforcement action against a company in the for-profit college industry. The CFPB filed a lawsuit accusing a for-profit college of predatory student lending, alleging that it exploited its students.
This action comes on the heels of a CFPB warning for financial institutions about the potentially risky practice of failing to disclose arrangements with colleges and universities to market bank accounts and other financial products to students. CFPB Director Cordray is encouraging financial institutions to voluntarily make the arrangements available on their websites. Earlier in the year the CFPB also met with some of the country’s largest private student lenders and servicers and is encouraging them to create flexible repayment plans to meet the needs of consumers.
With all of the recent activity in the student loan market place it’s a good time for credit unions to review their marketing and lending practices closely to ensure borrowers are fully informed about the terms of the agreement and repayment options.
If student loans or other CFPB related issues (aka mortgages) strikes a chord in your financial institution I encourage you to consider applying for the CFPB’s Credit Union Advisory Council. The deadline was extended until March 14, 2014.