On September 14, the CFPB released
highlighting risks associated with college tuition payment plans. Analyzing nearly 450 college websites, the report found that many plans lack clear disclosures and have confusing repayment terms, potentially causing students to miss payments and accumulate debt. Additionally, the CFPB noted that some institutions use transcript withholding as a debt collection tool, a practice deemed illegal and detrimental to students' career prospects.
Key findings include:
- Inconsistent and confusing disclosures in tuition payment plans.
- Substantial fees, including enrollment fees, returned payment fees, and late fees, leading to high costs for students.
- Intrusive debt collection practices, such as withholding transcripts, negatively impacting students' futures.
- High costs for missed payments and potential conversion of no-interest plans into interest-bearing loans.
- Contracts that may force students to waive legal rights and protections.
- Lack of standardized disclosure requirements, leading to inconsistency in how plans are presented on school websites.
The CFPB plans to continue monitoring tuition payment plans and school-based lending practices to protect consumers from potential violations of federal consumer financial laws.