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College and University Institutional Loans under the CFPB Microscope



January 20, 2022

On January 20, 2022, the Consumer Financial Protection Bureau (CFPB) announced new efforts to examine postsecondary schools’ institutional lending programs. Many colleges and universities offer in-house student loans, financed by the schools themselves, to meet needs not filled by Federal Student Aid and other scholarships. Some institutions do this without considering the intersection of their lending practices with applicable consumer lending and banking laws.

These laws may include the Federal Truth in Lending Act (TILA) as well as state consumer lending, licensing, and loan collection provisions. Typical required elements include disclosures, waiting periods, and collection limitations—such as those seen in trending state laws prohibiting the common practice of transcript withholding. Violations can carry heavy penalties.

The January 20 CFPB press release notes that the bureau’s updated Supervision and Examination Manual adds a section on student loans. The updated manual addresses transcript withholding and enrollment restrictions related to student loan repayment status as well as TILA compliance. Though the press release expressly calls out for-profit institutions as perpetrators of abusive lending practices, the laws in question generally apply to nonprofit colleges and universities as well.

What this means for you

When implemented with care, institutional student loans can be a lifeline for students financing higher education. To ensure compliance, institutions should:

  • Evaluate potentially relevant federal and state laws;
  • Build required elements into the structure of loan programs;
  • Periodically assess legal and regulatory developments and revise systems as needed.

Once established, maintaining compliance in a college or university lending program usually does not impose a resource-intensive burden.

Contact us

For more information on meeting legal and regulatory requirements for college and university institutional student loan programs, contact the authors or an attorney in Husch Blackwell’s Education practice.


Marci V. Kawski


Julie Miceli

Office Managing Partner

Lisa J. Parker