Given the massive amount of student loans accumulation in the US (more than $1.2 trillion), one can only predict that the regulator will do something about it.  As reported by the media, CFPB (Consumer Financial Protection Bureau) has conducted due diligence on student loans and on February 26, 2014, the Bureau filed a lawsuit against a for-profit institution.

The court rulling will have significant consequences not only for-profit institutions, but also for its sister institutions (not-for-profit).  Moreover, If the court finds any inapproprite policies, the questions would be what kind of consequences, either jail-time or monetary fines will be imposed to the institution or both?.  If it is jail-time, who will stay in the big house?  Would it be the School’s Board members, the management (what level, president and its cabinet members?) or both or all?

The Bureau also stated that its action serves as a warning to other for-profit institutions.  As the Association has said in many occasions, the root of the problem has something to do with college efficiency.  If the lawsuit has been filed against a for-profit entity, then it is also likely that on-going investigations on not-for-profit higher institutions are happening right now.  AAEA has tried to convey the message to the industry to control their spending and not to pass the inefficiency to the students by increasing the tuition.  If this business model and “old” paradigm worked in the past, it will not work in the new economy.  If colleges ignore the new reality, one only can expect that they, the colleges have to deal with more regulations in the future. 

Please let us know what do you guys think?