• Friday, November 27, 2009
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Congressman Asks FTC to Investigate Lenders' 'Deceptive' Marketing to Students

The chairman of the U.S. House of Representatives education committee opened a new line of inquiry today in his investigation of the student-loan industry, asking the Federal Trade Commission to look into how private loan companies market to students.

Until now, the chairman, Rep. George Miller of California, has focused on conflicts of interest between lenders and colleges participating in the federally subsidized guaranteed-student-loan program. Just on Tuesday, Mr. Miller, a Democrat, demanded records relating to that inquiry from the Education Department and the White House.

In a letter to the chairman of the trade commission, Representative Miller said that his committee had received copies of “unfair and deceptive” marketing letters, including offers under official-looking logos and messages with threatening language, such as “failure to respond could result in higher monthly payments.” The commission administers several of the nation’s consumer-protection laws.

Also today, the top Republican on the Senate education committee introduced a bill designed to crack down on conflicts of interest in the student-loan programs. The bill, filed by Sen. Michael B. Enzi of Wyoming, is the fourth to be introduced on the topic, but the first to bar colleges from using preferred-lender lists. In their place, the bill would require colleges to provide would-be borrowers with a guide that “enables them to do their own evaluation of the loan products, benefits, and services offered by the lenders,” according to a news release from Mr. Enzi’s office. The bill would also phase out the ability of colleges to operate as lenders in the guaranteed-loan program, a practice known as “school as lender.” —Kelly Field