The National Consumer Law Center has applauded the state of Colorado for its recent passage of a banking law exercises Colorado’s right to opt out of a federal law that predatory lenders claim allows them to ignore state interest rate laws and charge rates of 100% to 225% if they launder their loans through an out-of-state bank.
In recent years, several high-cost nonbank lenders – including American First Finance, EasyPay Finance, Elevate, the auto title lender LoanMart, Opportunity Financial (OppFi), and the installment loan brands of the payday lenders CashNetUSA and Check ‘n Go – have teamed up with banks in states like Utah that have no rate caps, claiming their loans are bank loans exempt from state interest rate limits.
It’s always nice to be able to report on a few things governments are doing right, if only to shame other governments into following suit and doing the right thing.
Likewise we applaud agencies like the CFPB (the brainchild of professor Elizabeth Warren) for regulating consumer finance with an eye toward to ensuring that consumers are not endangered financially by sharp or misleading practices by ruthless financiers, with veteran consumer lawyer Rohit Chopra in charge.
They are going to be key to offering help and monitoring the financial stress of those facing upcoming student loan repayments.
The pause on federal student loan interest, payments, and collections is now scheduled to end 60 days after June 30th, which means borrowers will have to start making payments soon. In April 2022, we provided an overview of the credit health of student loan borrowers during the first two years of the payment pause. And in an update late last year, we showed that student loan borrowers were increasingly likely to struggle with payments on their other debts. We have continued to monitor the situation to better understand how borrowers may fare when payments resume and where further support may be needed.
In this post, we provide a new update showing:
- More than one-in-thirteen student loan borrowers are currently behind on their other payment obligations. These delinquencies are higher than they were before the pandemic, despite a small seasonal decrease in the most recent data.
- About one-in-five student loan borrowers have risk factors that suggest they could struggle when scheduled payments resume.
- Median scheduled payments on other debt obligations have increased by 24 percent for student loan borrowers likely returning to repayment. In percentage terms, these increases are especially large for younger borrowers (252 percent, or $65 to $229).
- More than four-in-ten borrowers in our sample will return to repayment with a new student loan servicer.