CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

Federal Consumer Loan Watchdog Investigates For-Profit Colleges

05/23/2012

The Chronicle of Higher Education - May 22, 2012 - by Goldie Blumenstyk

The new federal Consumer Financial Protection Bureau is investigating ITT Educational Services about the for-profit-college company's student-loan practices, ITT disclosed on Tuesday in a filing with the Securities and Exchange Commission.

In its demand for documents and other information from the company, the bureau said the investigation was part of a broader inquiry "to determine whether for-profit postsecondary companies, student-loan origination and servicing providers, or other unnamed persons have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans."

Earlier this month, another giant for-profit-college company, Corinthian Colleges Inc., disclosed that it too was being investigated by the bureau, and had also been served with a civil subpoena demanding documents and other information about its loan practices and other company matters.

Both college companies operate private-student-loan programs in conjunction with outside entities, and in their filings each said that their programs did not violate any laws.

In November a key official with the bureau said the private-student-loan business "has been operating in the shadows for too long," and the bureau has invited students, colleges, and lenders to suggest ways to better regulate the loans.