CFPB Settles With Vocational School Over Alleged Misrepresentations to Prospective Students

The CFPB entered into a consent order with a vocational school and its individual owner to resolve allegations that the school deceived students about the cost of educational loans and potential hiring rates after graduation. 

The school offered students “income share agreements” to finance their tuition.  Under these agreements, the students would defer payment of their tuition during enrollment by agreeing to pay the school some predetermined share of their future income.  The CFPB alleged that the school made false representations that these agreements were not loans, did not create debt, and were risk-free.  The school also allegedly hid the cost and nature of the agreements by not disclosing finance charges and that these agreements carried many of the same risks as other types of loans. The CFPB also alleged that the school stated that graduates had job-placement rates as high as 86 percent, when in fact the company’s internal metrics showed placement rates were between 30 to 50 percent.

The school entered into the consent order without admitting or denying the CFPB’s allegations.  Among other things, the consent order permanently restrains the school from all consumer-lending activities and prohibits the individual owner from student-lending activities for ten years.  The order also requires the school to cease collecting payments for certain students, eliminates finance charges for certain agreements, and allows students to withdraw from the program without penalty.  The order also requires the school to pay more than $164,000 in civil money penalties.