On January 20, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it will examine postsecondary schools' "in-house" lending practices (the Announcement). The Announcement highlights the CFPB's intent to focus on schools' debt collection practices, such as withholding transcripts from delinquent borrowers, and whether the schools maintain "preferential relationships" with certain student loan lenders in light of requirements in the early 2000s after "many lenders and institutions of higher education were caught engaging in kickback arrangements that gave schools the incentive to steer students into certain loans."

Significantly, the CFPB published a revised set of examination procedures describing how it will examine student loan providers, including schools that offer institutional loans. The updated exam procedures note the CFPB's position that "[p]rivate education loans sometimes take non-traditional forms such as temporary credits and income share agreements."

Prior to joining the CFPB, Director Rohit Chopra was vocally concerned about the rise of alternative education finance products such as Income Share Agreements (ISAs). The CFPB recently entered into a consent order with an ISA provider in which it asserted that ISAs are loans, a legal conclusion that is disputed by the nascent ISA industry. The CFPB's new examination procedures further confirm the CFPB's position in this regard.

The examination procedures ask examiners to "[d]etermine whether a supervised entity uses payment plans or temporary credits for all or any portion of its programs." So-called "payment plans" that involve deferral of a consumer's payment obligation and may constitute private education loans subject the education provider to the CFPB's oversight as well as various state laws relating to retail installment sales, debt collection and student loan servicing. 

Post-secondary educational institutions should review their payment policies to validate that they have appropriate policies and procedures with respect to any tuition payment deferrals, as well as their debt collection and other transcript withholding policies.

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