Risks of College Tuition Payment Plans: CFPB Report and Consumer Group Warn

A report by the Consumer Financial Protection Bureau (CFPB) reveals that college tuition payment plans offered by many institutions can put student borrowers at risk. The report found inconsistent disclosures and confusing repayment terms in these plans, leading to missed payments, late fees, and accumulating debt. Some institutions also withhold transcripts as a debt collection tool, which is potentially illegal and can have severe consequences for students. The report highlights the need for colleges and universities to review their repayment plans and avoid high fees or coercive debt collection practices. Additionally, the report identifies other risks such as snowballing fees, forced arbitration provisions, and confusing disclosures. The CFPB will continue to monitor tuition payment plans and school-based lenders for potential violations of consumer financial law.