December 1, 2008
Should private student lenders profit from the Bailout?
Not according to consumer advocacy groups. According to the Washington Post, “Student advocacy groups are urging the Treasury Department to prevent a new $200 billion consumer-lending program from benefiting private student lenders, which they say are largely unregulated and prey on students with risky, high-interest loans.”
Remember, these are the loan programs that were the focus of the conflict-of-interest scandal last year.
While Federal loans offer wonderful consumer protections, private loans are largely unregulated and cannot be dissolved even in bankruptcy.
These advocacy groups are recommending that private student lenders not be bailed out, or if they are bailed out then force regulations upon them that protect consumers from predatory lending.