Attorney General Lori Swanson is calling for new legislation to protect students from abuses by for-profit colleges and loan-servicing companies.
On Tuesday, Swanson said tougher laws are needed to require for-profit colleges to disclose accurate job-placement and graduation rates after continued complaints about “aggressive enrollment” tactics.
At the same time, she proposed what she called a “Borrower Bill of Rights” for students with private college loans. The proposals, she said, would ensure that companies that service such loans disclose key information, such as interest rates and repayment options.
Complaints have spiked, she said, about students “getting the runaround from servicing companies when trying to get basic information to prevent their own credit from being dinged.” The problem extends beyond students, she said, to relatives who cosign their loans.
The proposals would apply to private loans because states cannot regulate federally guaranteed student loans.
Swanson wants to require loan service companies to give periodic updates to students while still in school, and to “clearly and conspicuously” disclose the amount owed, interest rates and due dates. It also would require the companies to work with delinquent borrowers to explain their payment options.
In addition, Swanson is asking the Legislature to require for-profit colleges to “clearly disclose” if their course credits are unlikely to transfer to other public or private colleges, a frequent complaint. The legislation also would require for-profit schools to “act in a student’s best interest at all times” and to disclose job placement and graduation rates for individual programs.
Swanson, who has sued a number of for-profit colleges for fraud for allegedly misrepresenting their programs, said the new laws are needed to prevent future problems. “It would be far better for the students not to be defrauded in the first place.”