Project on Predatory Student Lending

Project on Predatory Student Lending
Name	Project on Predatory Student Lending
Formation	2007
Dissolution	2018
Headquarters	New York City
Founder	New York City
Leader title	Director

Project on Predatory Student Lending was an advocacy and research initiative originally based at New York City legal and public interest institutions that focused on abuses in student loan markets, for-profit college practices, and loan servicer conduct. The initiative conducted investigations, produced reports, participated in litigation, and briefed policymakers in venues such as the United States Department of Education, United States Senate, and United States House of Representatives. Its work intersected with major actors including Consumer Financial Protection Bureau, National Consumer Law Center, Center for Responsible Lending, and prominent law firms.

Background and Formation

The project emerged amid congressional and regulatory scrutiny following high-profile events like the Great Recession (2007–2009), renewed oversight of Higher Education Act of 1965 programs, and investigative reporting by outlets such as The New York Times, ProPublica, and Los Angeles Times. Founding personnel included attorneys and advocates with prior experience at Ford Foundation, Open Society Foundations, and the American Civil Liberties Union. The initiative coordinated with state attorneys general offices including those of New York (state), California, and Massachusetts and with national organizations such as AARP and Student Veterans of America.

Mission and Objectives

The project's stated mission was to document alleged predatory practices by actors in the student loan sector and to support enforcement actions under statutes including the Truth in Lending Act, the Telephone Consumers Protection Act, and provisions of the Higher Education Act of 1965. Objectives included researching for-profit college recruitment tactics linked to entities such as University of Phoenix, DeVry University, and ITT Educational Services, advising regulators like the Federal Trade Commission and Consumer Financial Protection Bureau, and empowering borrowers through partnerships with organizations including Legal Services Corporation and Public Counsel.

Investigations and Major Findings

Investigations produced reports alleging deceptive recruitment and loan servicing practices tied to proprietary institutions and private lenders such as Navient and Sallie Mae. Findings claimed that some institutions leveraged federal student aid programs, Pell Grant eligibility, and Federal Family Education Loan Program pathways to inflate enrollments. Reports cited complaint data from Consumer Financial Protection Bureau, enforcement actions by the New York Attorney General, and audits by the Government Accountability Office. The project also documented issues with income-driven repayment enrollment, forbearance counseling, and alleged misrepresentation of job placement rates at career schools such as Kaplan, Inc. and ITT Technical Institute.

Legal Actions and Impact on Policy

Work by the project informed litigation and administrative actions including cases pursued by State Attorneys General and federal enforcement by the Consumer Financial Protection Bureau and the Department of Justice (United States). Evidence compiled by the initiative was referenced in lawsuits against lenders and servicers like Navient Solutions, LLC and in borrower defense rulemaking under Secretary of Education Betsy DeVos and Secretary of Education Arne Duncan administrations. Its contributions were cited in congressional hearings before committees such as the United States Senate Committee on Health, Education, Labor, and Pensions and the United States House Committee on Education and the Workforce and influenced state-level statutes and settlements.

Responses and Controversies

The project generated responses from a range of stakeholders: advocacy supporters including National Consumer Law Center and Public Citizen, academic commentators at Harvard University and New York University School of Law, and critics from trade associations representing for-profit colleges and lenders including Career Education Colleges and Universities and Consumer Bankers Association. Opponents challenged methodologies and the project's ties to litigation, citing statements from officials at DeVry Education Group and Education Management Corporation. Debates appeared in media outlets including The Wall Street Journal and Bloomberg News and in analyses by nonprofit think tanks like American Enterprise Institute and Brookings Institution.

Organizational Structure and Funding

Administratively, the project operated as a program within nonprofit legal entities and collaborated with university clinics at institutions such as Columbia University and Georgetown University Law Center. Funding came from foundations including Ford Foundation, Open Society Foundations, and private philanthropy aligned with consumer protection work such as grants from Rockefeller Foundation-era philanthropies and donor-advised funds. The initiative also received in-kind support from public interest law firms and coordinated pro bono representation with firms from the American Bar Association network.

Legacy and Subsequent Developments

After winding down, the project's research and case files continued to inform borrower advocacy, litigation, and policy debates involving income-driven repayment reform, borrower defense to repayment, and student loan discharge under insolvency frameworks. Its scholarship influenced successor efforts at organizations like Student Borrower Protection Center and ongoing inquiries by the Consumer Financial Protection Bureau and state enforcement offices. The archive of reports and litigation referrals remains part of the documentary record cited in subsequent settlements and regulatory rulemaking concerning student financial aid and for-profit higher education reform.

Category:Consumer protection organizations Category:Student loans