On April 26, 2021, the California Office of Financial Defense and Innovation (DFPI) announced that it had entered into a settlement arrangement with an on-line coding university, resolving allegations that the faculty engaged in deceptive functions and methods in violation of California’s new Consumer Financial Protection Regulation (CCFPL).
The university provides its learners the alternative to finance their education by a contract in which the student guarantees to repay the college dependent on a percentage of the student’s foreseeable future revenue. This agreement has a provision that states, “this extension of credit history is a capable educational personal loan and is subject to the limits on dischargeability in personal bankruptcy contained in Area 523(a)(8) of the United States Personal bankruptcy Code.” DFPI alleged that this language is deceptive in violation of the CCFPL due to the fact the agreement is not a “qualified educational loan” and thus is not issue to limitations on dischargeability.
Underneath the settlement agreement, the university agreed to give discover to pupils who entered into a contract with the university that the personal bankruptcy non-dischargeability provision is not correct. In addition, the school agreed to retain a 3rd-bash to critique its contract to assure that the deal complies with all relevant state and federal laws.