Student Defense Urges States to Prevent Abuses in College Recruitment By Using and Improving Credit Discrimination Laws
FOR IMMEDIATE RELEASE:
June 16, 2025
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Student Defense
press@defendstudents.org
Student Defense Urges States to Prevent Abuses in College Recruitment By Using and Improving Credit Discrimination Laws
A new report, supported by Senator Raphael Warnock, lays out a state-level strategy to combat reverse redlining
A new report published by Student Defense highlights how states can better protect prospective students from predatory recruiting practices in higher education.
Poor-performing predatory institutions of higher education—often (but not always) for-profit—have long targeted marketing and recruiting efforts at students of color, single mothers, and other marginalized communities. While most states have credit discrimination laws in place that would prohibit these practices (known as “reverse redlining”), rarely, if ever, have those laws been applied to higher education.
Following a path set by a recent class-action lawsuit, Carroll v. Walden University, Student Defense examines how states can use and improve their credit discrimination laws, as well as the federal Equal Credit Opportunity Act (ECOA), to root out reverse redlining and protect students from discriminatory recruitment.
In the Walden University case, former students alleged that the institution deliberately misrepresented the cost and duration of its Doctor of Business Administration (DBA) program and intentionally targeted those misrepresentations at Black and female students. In a ruling denying Walden’s motion to dismiss, the court expressly allowed reverse redlining claims under ECOA, the first time a federal court held that ECOA can be used in the higher education context.
Since then, courts and federal regulators, including the Consumer Financial Protection Bureau, have favorably cited the Walden decision, paving the way for ECOA and state credit discrimination laws to be used to challenge discriminatory lending practices in higher education. The New York Times has also covered the impact of the Carroll v. Walden decision.
Following the path set by Carroll v. Walden, Student Defense outlines a roadmap for how states can use and strengthen their credit discrimination laws by:
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Clarifying that institutions of higher education are “creditors” under the law.
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Amending their laws or otherwise making clear that federal, state, private, and institutional student loans are covered credit transactions under state law.
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Making explicit that institutions can violate credit discrimination laws even if the loan terms are not discriminatory.
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Eliminating burdensome exhaustion requirements, extending statutes of limitation, and eliminating caps on damages.
“Young people shouldn’t have a mortgage before they have a mortgage. The burdens of student loans are already out of control, not even factoring in when bad actors try and circumvent the rules and saddle students with even more debt,” said Senator Reverend Raphael G. Warnock. “I’ve worked with both parties to protect students and to lessen the load they take on after graduation, and I am proud to continue to do that work with organizations like Student Defense.”
“Taking out student loans is one of the most consequential financial decisions a person can make. It deserves the same kind of protection the Equal Credit Opportunity Act affords to other consumer credit sectors. This is especially true when discriminatory marketing schemes swindle students out of their hard-earned money,” said Student Defense Vice President Alex Elson. “Now more than ever, states must rise up to protect students. The same way a person’s race or gender shouldn’t prevent them from getting a good deal for a house or car — it also shouldn’t make them the target of a bad deal for a college degree.”
Read the full report, How States Can Better Protect Prospective Students from Reverse Redlining by Institutions of Higher Education, on the Student Defense website.