On February 20, 2024, the California Court of Appeal largely affirmed an eight-figure judgment against Ashford University (“Ashford”), an on-line, for-profit college, and its parent company, Zovio, Inc. (formerly Bridgepoint Education) for violations based on false and misleading statements to prospective students. Ashford and Zovio had not challenged the trial court’s liability determination, but sought review and reduction of the penalty awarded in that action.… Continue Reading
Student Loans
FTC bans group of student loan debt relief scammers from debt relief industry
The Federal Trade Commission (“FTC”) recently entered into proposed stipulations with a group of student loan debt relief providers to resolve allegations that the group conducted deceptive marketing and sales practices in collecting over $8 million in “junk fees” for nonexistent debt relief services.
Last August, the FTC filed a complaint against Express Enrollment LLC (d/b/a SLFD Processing), Intercontinental Solutions LLC (d/b/a Apex Doc Processing LLC), and their operators Marco Manzi, Ivan Esquivel, and Robert Kissinger alleging violations of the unfair or deceptive acts or practices (“UDAP”) prohibitions of Section 5(a) of the FTC Act , the FTC’s Telemarketing Sales Rule (“TSR”), and Section 521 of the Gramm Leach Bliley Act, which prohibits obtaining a person’s financial information by making false statements, in connection with their deceptive marketing and sale of student loan debt relief services.… Continue Reading
This week’s podcast episode: Recent developments affecting student loan origination and servicing
With federal student loans approaching $1.7 trillion, private student loans approaching $129 billion, strident consumer group advocacy, and national elections on the horizon, student loan origination and servicing continues to be a focal point for federal and state regulators. In this episode, which repurposes a webinar, we first discuss recent developments at the Department of Education involving loan forgiveness, the framework for servicer accountability, preemption guidance, and new repayment plan. … Continue Reading
CFPB report identifies challenges faced by borrowers in resumption of student loan payments
The Consumer Financial Protection Bureau highlighted its observations of the resumption of federal student loan payments by consumers after more than three years of a payment moratorium due to COVID-19 in a report released on January 5, 2024. The report, titled “Issue Spotlight: Federal Student Loan Return to Repayment,” highlights several issues it maintains are confronting consumers, including extended call hold times, processing delays in income-driven repayment applications, and inaccurate billing and disclosure statements.… Continue Reading
Dept. of Education issues framework for student loan servicer accountability
The White House signaled last week that, with the resumption of federal student loan payments, federal student loan servicers can expect to face increased scrutiny. The Department of Education issued a “Framework for Student Loan Servicer Oversight and Accountability to Protect Borrowers” and indicated that “[t]he framework’s strategies help the Department to encourage servicers to better support borrowers and allows the Department to hold their feet to the fire when they have servicing failures.”… Continue Reading
California DFPI Finalizes Regulations Governing Student Loan Servicers
On October 13, 2023, the California Department of Financial Innovation (DFPI) published final regulations implementing the Student Loan Servicing Act (“SLSA”) and the Student Loans: Borrower Rights Law. The final regulations are the culmination of two sets of proposed regulations from the DFPI, which we previously covered here. The final regulations become effective January 1, 2024.… Continue Reading
CFPB Continues to Expand Its Scrutiny of Higher Education with New Report on College and Postsecondary School Tuition Plans
The CFPB recently released a report regarding higher education tuition payment plans that discusses prevailing practices and highlights certain CFPB concerns regarding consumer impact. The CFPB’s report was based upon (a) a review of hundreds of postsecondary school and college websites that contain publicly available information on tuition plans and related contracts, (b) consumer complaints submitted to the CFPB and Department of Education, and (c) interviews with consumers and meetings with industry participants.… Continue Reading
CFPB seeks comment on new survey of student loan borrowers
The CFPB has published a notice in the Federal Register seeking comment on its request for approval by the Office of Management and Budget of a new one-time survey of student loan borrowers. Comments must be received by September 18, 2023.
The survey is intended to allow the CFPB “to understand [student borrowers’] borrowing decisions, their experience managing their loans, and their expectations for the future.” … Continue Reading
Biden loan forgiveness alternatives face new challenge
Less than six weeks after the U.S. Supreme Court held that President Biden lacked authority to advance his signature effort to forgive upwards of $430 billion in federal student loans, a new challenge has been filed to other major elements of his higher-education agenda. On August 4, 2023, the Cato Institute and Mackinac Center for Public Policy filed suit in the Eastern District of Michigan, alleging that the U.S.… Continue Reading
Kentucky student loan servicer license application available on NMLS
Last year, Kentucky enacted the Student Education Loan Servicing, Licensing, and Protection Act of 2022 (the “Act”), which requires student loan services to be licensed in Kentucky. The Act took effect on July 13, 2023 (the “Effective Date”).
On the Effective Date, the Kentucky Department of Financial Institutions (“DFI”) released its new application checklist and made a license application available through the Nationwide Multistate Licensing System & Registry (“NMLS”). … Continue Reading