Report: For-Profit Colleges Target of Expanded CFPD Probe
At a time when college graduates are defaulting on student loans in Florida at the highest rate in 20 years, the Consumer Financial Protection Bureau, along with several state attorneys general, are expanding their investigation into a number of for-profit colleges, accused of predatory student-lending practices.
Quoted recently by The Wall Street Journal, Kentucky’s Attorney General Jack Conway, who is chair of a group comprised of 32 state attorneys general currently investigating for-profit higher education firms, said that numerous government lawsuits would likely be filed in the coming months.
Our Miami student loan attorneys recognize that college students are considered prime targets for shady lending firms. The federal and state investigations focus not only on outside investor loans that have been provided through the colleges, but also on the colleges’ promises for job placement.
That is, students are promised that by attending the school, they have a very good chance at landing a high-paying job in their field of study. However, many colleges it seems have inflated or outright misrepresented their placement statistics, meaning students are left with huge, high-interest loan bills to repay and no good-paying job to make it happen. In many cases, the terms of those loans weren’t fully disclosed prior to the student accepting responsibility for them.
Because student loans can’t be wiped out in a bankruptcy, this leaves hundreds of thousands of students in a financial lurch.
While the CFPB hasn’t disclosed a great amount of detail regarding its investigations, there are indications that one of the primary focuses of the investigation includes whether students receive adequate information regarding the risk of the loans they are signing off on. In some cases, it has been reported that certain schools see a 50 percent default rate on student loans. Schools don’t disclose this information to students, but such data is offered up to investors.
In one example, a 30-year-old woman obtained an associate’s degree in electrical engineering and computer design. She has yet to find work, but she does have $55,000 in federal loans, which she must repay at nearly 7 percent interest, plus $11,000 in private loans through the school, which she must repay at a 12 percent interest rate over the next decade. She’s since defaulted on her payments, and is being hounded by creditors to pay $300 monthly.
Although bankruptcy may not be an option to relieve students of these predatory loan obligations, filing a consumer lawsuit might be something to explore. Other options could include debt consolidation or filing for a bankruptcy that would eliminate or restructure your other debts so that the student loan debts are easier to repay.
The Department of Education recently reported that one out of every 10 borrowers have defaulted on their federal loans between 2012 and 2013 – which represents the highest default rate since 1995.
It’s estimated that nearly 40 million borrowers are carrying some $1 trillion in student loan debt, and there is strong evidence to suggest this is significantly hindering economic growth.
If you’re battling student loan debt in Miami or elsewhere in Florida, contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.