Student Group Tracks Higher Ed Watch and Files Complaint Against Private Loan Company

The United States Students Association filed a complaint with the Federal Trade Commission last week against Loan to Learn and its parent company, EduCap, Inc., claiming false advertising.

The complaint tracks an argument Higher Ed Watch made first in a post last week -- that Loan to Learn engages in misleading advertising and steers students away from federal loan and grant options that would be more affordable.

One example from Loan to Learns handbook Demystifying Financial Aid: private loans can be used for any education-related expense, including those not covered by most federal aid (computers, books, transportation), as if federal loan funds can't be used for those purposes.

Or there is this example from Loan to Learn's promotional materials: "subsidized federal student loans . . . have a lengthy application process with strict deadlines." The FAFSA is no fun, that's for sure. But there are no real deadlines. A student can take out a loan at the end of the school year to pay for expenses incurred during that school year.

Loan to Learn may face more bad PR soon. We expect that muckraking on the company, which offers private student loans with start up fees equal to up to 10% of principal borrowed and interest rates equal to up to 16% on top of start up fees, has just begun.

It defies reason to apply for a Loan to Learn loan without first applying for federal financial aid. The highest interest rate on a federal student loan is the Federal PLUS loan, which has an interest rate equal to 8.5%.

Stay tuned for more muck on Loan to Learn . . .