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In the student loan space, predatory lending practices are fairly common within the for-profit sector. Such is the case of the now-defunct Corinthian Colleges. The chain drove thousands of students toward risky, expensive loans to finance their degrees, which eventually became worthless after the chain’s collapse in 2015.
But expensive loans aren’t the only type of predatory lending practice in the student loan world. Debt relief and forgiveness scams have also become quite common. We’ll go over these practices, as well as how to spot them and legitimate ways to make your debt more manageable.
Key takeaways
- Predatory lending is any type of abusive, unfair or deceptive practice employed by lenders to push borrowers into taking high-cost, high-risk credit products.
- These practices disproportionately affect women and people of color, as these groups experience more difficulty making payments due to the existing gender and racial wealth gap.
- Predatory lending’s high costs can lead to financial distress and diminished credit, which inevitably impacts borrowers’ quality of life and overall well-being.
Predatory lending statistics
- In 2017, the Federal Trade Commission (FTC) launched an initiative known as “Operation Game of Loans” to crack down student loan debt relief scams. At the time, scammers had collected over $95 million in illegal fees.
- Academic Aid Center, Alumni Aid Assistance and Post Grad Aid are…
