Chairman Miller Opens New Line of Inquiry into Student Loans

Chairman Miller Opens New Line of Inquiry into Student Loan Industry

Miller Asks Federal Trade Commission to Investigate Deceptive Lender Marketing Practices

WASHINGTON, D.C. -- U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, today opened a new line of inquiry into the $85-billion-a-year student loan industry by asking the Federal Trade Commission to investigate the unfair and deceptive practices that lenders use to market their products and services to students. Until now, Miller's investigation has focused primarily on the conflicts of interest and financial relationships among lenders, schools, and public officials responsible for administering federal student aid programs.

"Every day, millions of students receive marketing letters from private lenders -- letters that are often intentionally designed to confuse or mislead students. These tactics are nothing short of predatory lending. No company should be able to get away with using aggressive scare tactics to profit off students who are already taking on enormous amounts of college loan debt," said Miller. "Just like any other group of consumers, students and their families deserve to be protected from any fraudulent or manipulative marketing practices."

During the course of Miller's investigation, the committee has come across examples of lenders' unfair and deceptive marketing letters. The letters use what appear to be official government logos and threatening language, such as "failure to respond could result in higher monthly payments." To view two examples, click here.

For more information on Miller's investigation into the student loan programs, click here.

Chairman Miller's letter to the FTC:

***

May 2, 2007

Deborah Platt Majoras

Chairman

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Attn: Ms. Claudia Simmons

Dear Chairman Majoras:

The Committee on Education and Labor is investigating unethical practices in the $85 billion a year student loan industry. During the course of the investigation, the Committee has seen a number of examples where lenders use deceptive marketing practices on students. Lenders do not always have the best interests of student consumers in mind when they market their products and services.

Given that the Federal Trade Commission administers a number of our nation's consumer protection laws, I respectfully ask you to look into these deceptive marketing practices. To assist in your efforts, I have attached two examples where lenders use what appear to be official government logos and startling language to scare students toward their products. Unfair and deceptive practices such as these cannot continue unchecked.

I ask that you keep the Committee apprised of your efforts and contact the Committee's Chief Investigative Counsel, Michael Zola, at (202) XXX-XXXX with any questions.

Sincerely,

GEORGE MILLER

Chairman

cc: Senior Republican Member Howard "Buck" McKeon

Attachments