CFPB To Review Post-Secondary School Lending Practices

The CFPB will begin examining institutional practices of post-secondary schools that extend private loans directly to students.

Many universities and colleges offer in-house or "institutional" student loans that are not affiliated with federal student loan programs administered by the U.S. Department of Education. The CFPB is concerned that these schools have not historically been subject to the same servicing and origination oversight as traditional lenders.

As part of its effort, the CFPB will update its exam procedures to include a new section on institutional student loans. The CFPB will now examine institutional practices related to institutional loans, such as: (i) placement of enrollment restrictions; (ii) withholding of transcripts; (iii) improperly accelerating payments; (iv) failure to issue refunds; and (v) maintaining improper preferential lending relationships.