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Ohio Foreclosure Defense & Consumer Law > Blog > Consumer Law > CFPB Finds Tuition Payment Plans Violate Consumer Laws

CFPB Finds Tuition Payment Plans Violate Consumer Laws


A recent report released by the Consumer Financial Protection Bureau (“CFPB”) found that college tuition payment plans can place student borrowers at risk; that some payment plans are so confusing, and carry such expensive fees, that they lead students further into debt. The report also found that a number of institutions choose to withhold transcripts from students as a debt collection tool, which is illegal, and can obviously have severe consequences on students, especially as they enter the job market.

Because a number of these payment plan agreements and contracts include terms and conditions that waive borrowers’ legal protections and limit how consumers can enforce their rights under existing laws, it is critical that borrowers work with Columbus, Ohio consumer law attorneys before entering into them and when issues come up.

Contract Issues 

Every term, an estimated four million students enter into some form of tuition payment plans arranged with their school. And yet, while the plans can appear to be helpful to some students, in fact, they carry risk. These students originally entered into agreements with schools to spread the upfront cost of tuition into several, interest-free loan payments. However, those hundreds of agreements that were examined by the CFPB revealed that many of them had inconsistent disclosures and confusing repayment terms, placing the students at risk of missing payments and therefore incurring late fees and debt.

Educational Institutions Acting as Lenders & Students with No Other Choice 

The CFPB report also found that a number of schools (roughly 60 percent) are partnering with third-party service providers to engage in these servicers, with the schools acting as lenders who arrange for late and other fees with the students as part of their tuition payment plan. These schools and their students are also in often unique circumstances in which there is often no other option available to the student to meet their tuition payment obligations other than to enter into these agreements, which creates a kind of conflict-of-interest issue.


The statistics behind the extra fees tacked on as part of these agreements were alarming, and included the following:

  • Almost 90 percent of schools studied charged an enrollment or set-up fee that went as high as $250;
  • 60 percent of schools charged a returned payment fee as high as $65; and
  • 44 percent of schools charged late fees at an average cost of $46 per late payment, some which went up to $300 for the first late payment.

When added into the cost of the tuition balance, all of these created a high cost of credit, especially when the amount borrowed was somewhat low and enrollment fee was high. In fact, students were found to face annual percentage rates as high as 237%.

Contact Our Columbus, Ohio Consumer Law Attorneys

At Kohl & Cook Law Firm, LLC we are committed to helping consumers fight back when they’ve been taken advantage of or deceived. Learn more by contacting us and scheduling a free consultation today!



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