Public colleges and universities under fire for promoting controversial education loans – The Washington Post
Public colleges and universities are facing criticism from consumer advocates for advertising high-cost private loans to students in nondegree programs.
A report being released Friday by the Student Borrower Protection Center (SBPC) accuses schools, such as Virginia Tech and Indiana University, of promoting specialty finance companies that can charge double-digit interest for loans with opaque terms. The advocacy group, founded by former Consumer Financial Protection Bureau official Seth Frotman, says colleges could be violating federal rules by failing to disclose arrangements with the lenders.
“Across the country, public colleges saw the scam predatory for-profit schools ran a decade ago and decided they wanted in on the action — regulators must bring these abuses to an end,” Frotman said.
But some of the schools identified in the report dismissed the allegations as baseless and accused the advocacy group of mischaracterizing their marketing materials, as did the creditors and third-party vendors cited in the report.
SBPC stands by its findings, which are based on publicly available data. Researchers examined the online marketing materials of dozens of public institutions and reviewed some of their contracts with third-party contractors hired to run nondegree programs.
They say contractors such as Trilogy, Fullstack Academy and Promineo are helping schools push students toward what they call “shadow debt” — loans that operate outside of the traditional education finance market. The practice is common for boot camps, short-term courses that many colleges offer through third-party providers known as online program managers, according to the report.