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Consumer Financial Protection Bureau will examine private student lending

Higher Ed Dive

Rick Seltzer

January 20, 2022

Dive Brief:

• The Consumer Financial Protection Bureau will scrutinize operations at colleges that offer private loans directly to students, it said Thursday.

• The CFPB is updating its exam procedures to look at a category of loans often called institutional student loans. They’re not normally affiliated with the U.S. Department of Education’s federal student loan program but are offered by colleges themselves.

• Colleges and other postsecondary education providers extending lines of credit to families haven’t received the same origination and servicing oversight as other lenders, according to the CFPB. The agency is concerned about institutional loans because of past examples of high interest rates and “strong-arm debt collection practices,” it said in a news release, citing actions at two for-profit college operators that shut down in the mid-2010s, Corinthian Colleges and ITT Educational Services.

Dive Insight:

The CFPB will review actions against students that only colleges are able to take: restricting enrollment or class attendance of students who are late on their loan payments and withholding academic transcripts from students who owe debts. Those actions can delay students’ graduations or make it hard for them to find jobs.

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Neg Reg Day 2: Gainful Employment Dominates Discussions, With Negotiators Also Focusing on Financial Responsibility

NASFAA

Owen Daugherty and Hugh T. Ferguson

January 20, 2022

The second day of the negotiated rulemaking session on Institutional and Programmatic Eligibility on Wednesday saw two of the committee’s most pressing issues take center stage, as negotiators were tasked with completing discussions on administrative capability and kicked off their discussion on gainful employment (GE).

The discussion on the standards of administrative capability picked up Wednesday where it left off the day before, as negotiators dissected the Department of Education’s (ED) draft regulatory language.

Notably, ED is proposing to add several new standards in the administrative capability rules including that an institution would be determined not administratively capable if it had engaged in misrepresentation or aggressive recruiting.

After a negotiator raised a concern about voting on these provisions when final language on misrepresentation and aggressive recruiting was not yet available, Greg Martin, a federal negotiator, said parts of the language for these issues are yet to be completed since they were part of the Affordability and Student Loans negotiated rulemaking session that concluded in December.

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California offers college students $10,000 for public service

The Press Democrat

Jocelyn Gecker

January 18, 2022

Gov. Gavin Newsom announced Tuesday that 45 colleges and universities in California, including some of the most prestigious campuses in the state, will be part of a new public service program that will subsidize tuition for students who do community service alongside their studies.

The program called “Californians For All College Corps” will start in the fall 2022 semester with 6,500 students who will be deployed to part-time work in areas of pressing need like K-12 education disparities, climate change and food insecurity, Newsom said in a news conference with the leaders of the state’s public university and community college systems.

In exchange for 450 hours of service, each student will receive $10,000 toward their education and can get academic credit for their work.

Seven of the 10 University of California campuses will take part in the program in 2022, including UC Berkeley and UCLA, along with 16 of the 23 California State University schools and more than two dozen community and private colleges. The $146 million cost was approved as part of last year’s state budget.

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California May Try Basic Income for College Students

Inside Higher Ed

Scott Jaschik

January 18, 2022

California may soon experiment with giving $500 a month to low-income students in the California State University system, the Los Angeles Times reported. State Senator Dave Cortese is considering legislation that would create a pilot program at select California State University campuses issuing monthly stipends for one year to students whose family income is in the bottom 20 percent of earners in the state. Up to 14,000 students could be eligible. A three-campus plan would cost the state about $57 million, and a five-campus plan would cost about $84 million, according to Cortese.

He cited statistics showing that nearly 11 percent of the Cal State system’s 480,000-plus students said they experienced homelessness in 2018. More than 40 percent of Cal State students reported food insecurity. For Black, first-generation college students, it was worse, with nearly 70 percent reporting food insecurity and 18 percent experiencing homelessness. “College students are couch surfing and sleeping in their cars. This could be enough money to rent a room, and if you don’t need a room, by all means, use it for what you do need it for,” Cortese said. “It’s like a booster shot. It could help get them off of this treadmill and stop them from dropping out, being on the streets and becoming homeless long term.”

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