By Elizabeth Peace
A group of advocacy organizations have called on the NCUA to look into potentially predatory loans being offered by for-profit colleges to college students through credit unions.
According to a media release from the Center for American Progress, the groups sent the letter to NCUA Chairman Debbie Matz Thursday and warned that loans made by federally chartered credit unions, federally insured, state chartered credit unions and CUSOs “may constitute unfair and deceptive trade practices, and threaten the credit unions’ safety and soundness by posing serious credit, reputation and compliance risks.”
The letter accused ITT Educational Services for allegedly developing a scheme to issue high-cost private student loans to its students through a CUSO.
“These loans defaulted at extremely high rates – demonstrating their fundamentally predatory nature, and their threat to safety and soundness,” the letter said.
The letter was signed by the Center for Responsible Lending Consumers Union; Consumer Action Generation Progress; Higher Ed, Not Debt; the National Consumer Law Center (on behalf of its low-income clients); Student Debt Crisis; the United States Student Association; Veterans for Education Success and the Woodstock Institute.