While millions of out-of-work Americans begin to explore new careers, PayPal is helping for-profit colleges prey on their dreams -- offering student loans with over 25% interest and charging up to $39 in late fees.

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Friend,

While millions of out-of-work Americans begin to explore new careers, PayPal is helping for-profit colleges prey on their dreams -- offering student loans with over 25% interest and charging up to $39 in late fees.

We just sent a letter to CFPB Director Kathy Kraninger and the acting comptroller calling for an immediate investigation into PayPal Credit and Synchrony Bank for misleading advertising and predatory practices. Add your name to join us >>

Here’s what’s going on:

PayPal Credit and a bank called Synchrony are offering loans to students interested in one of more than 150 largely unaccredited education and certificate programs.

The problem? Well, there are a few.

  • To start -- a 25% interest rate on a deferred interest loan. If the loan isn’t 100% paid off after the promotion period (often, 6 months), the borrower retroactively owes around 25% interest.
  • PayPal Credit charges up to $39 for a late or missed payment -- federal, and even private student loan companies like Discover and Wells Fargo, charge $0.
  • PayPal Credit has been accused of aggressive collection practices, designed to cause maximum distress to the borrower.

PayPal is aware of these issues and has so far taken little action to address its predatory practices.

This means that until the CFPB takes action, vulnerable Americans looking to make a positive change will see an ad promoting an unaccredited "school." Many of these people will sign up for a loan. In six months, if the entire balance of the loan isn't paid off, they could owe over 25% interest and be on the receiving end of PayPal’s relentless collection tactics.

It means that a student pursuing a career as a home inspector will pay $13,634 over the life of a $6,800 loan -- more than twice the amount borrowed. She'll owe $227 per month, while working in a field where salaries start at only $24,000.

PayPal’s products are being used to target students who've run out of options -- either because they don’t qualify for a federal loan or their desired “school” or program is ineligible for traditional student loans with lower rates.

Government oversight and agencies are set up to stop this type of predatory lending -- it's the job of the CFPB to investigate now, and we're not going to let up until they do.

Add your name to join Allied Progress in demanding action to protect student borrowers.

Thank you,
Allied Progress

P.S. Quick refresher: The interest rate on an undergraduate federal loan is 2.75%, private loans can run as low as 3.5%, and even credit cards have interest rates averaging around 16% -- which is nearly 9% lower than PayPal Credit.

You can read our letter to the CFPB Director Kathy Kraninger and the acting comptroller here.


  

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