In a letter to California’s Department of Financial Protection and Innovation (DFPI), the Student Borrower Protection Center, the Center for Responsible Lending, the Consumer Federation of California, Consumer Reports, the Student Debt Crisis Center, the National Consumer Law Center, NextGen Policy, and Young Invincibles commented on proposed rules for education financing products in California. The letter notes that the DFPI’s draft regulations already mark a substantial step forward in efforts to shine a light on the risky shadow student debt market while pointing to key areas in which the proposed rules could be revised to better protect borrowers.
Shadow student debt refers to the world of high cost, dangerous funds borrowed for education outside traditional student lending options. This variety of credit is frequently central to the business model of the most predatory for-profit schools. SBPC has worked to identify and alert borrowers about risks in this market.