The exploding market of Buy Now Pay Later (BNPL) credit demands the same level of oversight that we give to credit cards. BNPL can help some borrowers spread out their payments, but entails real risks and costs, which is not clear in advertisements highlighting interest-free payments and “no impact” on credit scores. Regulation is necessary to protect consumers from hidden...
“Income-share agreements,” or ISAs, fund a portion of educational costs in exchange for a percentage of a student’s earnings over time. Many ISA providers continue to argue that their products are not loans even though they lend money and subsequently require repayment, employing an old and predatory tactic that loan providers use to evade consumer protection guardrails. In fact, ISAs...
Oportun is a California-based financial services provider that is rapidly expanding its reach. In some states, Oportun has announced its loans will be originated by MetaBank, indicating it is employing the “rent-a-bank” scheme, wherein lenders pay a bank with a national charter that is willing to pose as the lender so they can avoid having to comply with state consumer...
Payday lenders often describe the cost of their loans in terms of fees or simple interest rates. Responsible lenders readily disclose the APR on their loans, aligned with the Truth in Lending Act (TILA). They are not afraid to let their customers compare the costs of their loans to other loans in the market. Tellingly, payday lenders often object to...
The “90/10 Rule” is meant to ensure that for-profit schools are, in fact, competitive in the marketplace and are not relying only on taxpayers to survive. In other words, the rule is based on the principle that a viable educational program should be funded in part by students or employers who are willing to pay cash to invest in career...
In a precedent-setting ruling, the California Court of Appeals at the end of 2021 handed down a decision affirming a broad preliminary injunction against a bail bond company called Bad Boys Bail Bonds. The court prohibited the company from collecting on $38 million in debt from cosigners who borrowed money to gain pre-trial release for their loved ones. The order...
Many of the problems that led to the failure of the Public Service Loan Forgiveness (PSLF) program are IDR problems in disguise—such as borrowers being steered into the wrong repayment plan and Family Federal Education Loan (FFEL) servicers failing to tell borrowers of consolidation options. These problems will not be corrected by a solution that only addresses the PSLF program.
As Adam Harris writes in his 2021 book, The State Must Provide: Why America’s Colleges Have Always Been Unequal—And How to Set Them Right: “America’s colleges and universities have a dirty open secret: they have never given Black people an equal chance to succeed.” Despite long-standing systemic challenges and the small average size of Historically Black Colleges and Universities (HBCUs)...
The $1.7 trillion student debt crisis impacts over 44 million families nationwide, and the burden of student loans falls particularly heavily on Black students because of historical and ongoing systemic racism. While Black families themselves typically have less wealth to draw upon to pay for college due to the racial wealth gap, Historically Black Colleges and Universities (HBCUs) have also...
The $1.7 trillion student debt crisis impacts over 44 million families nationwide, and the burden of student loans falls particularly heavily on Black students because of historical and ongoing systemic racism. While Black families themselves typically have less wealth to draw upon to pay for college due to the racial wealth gap, Historically Black Colleges and Universities (HBCUs) have also...