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The Education Department is discharging $72 billion in student loans for over 2,300 former students who attended Ashford University after the department found the online for-profit school made “substantial misrepresentations” that harmed borrowers, YahooFinance.com reported. The action applies to borrowers who enrolled in Ashford from March 1, 2009, through April 30, 2020, and filed for a borrower defense loan discharge, a legal ground borrowers can take against a school that engaged in misconduct related to the loan or the educational services it provided. These borrowers will receive emails from the Education Department in September and no further action is needed. Borrowers who attended Ashford but did not file a borrower's defense discharge will need to complete an application on the Federal Student Aid website. This discharge comes after litigation on behalf of the California Department of Justice against Ashford and its parent company, Zovio Inc. resulted in a judgment against both entities in March 2022.

More Americans are falling behind on their car loan and credit card payments than at any time in more than a decade, a troubling signal of consumer stress as higher prices and rising borrowing costs are squeezing household budgets, the Washington Post reported. The pain is most acute for lower-income earners, who have largely used whatever they managed to save during the pandemic with the help of government stimulus checks and breaks on obligations such as rent and student loans. “The increase in delinquencies and defaults is symptomatic of the tough decisions that these households are having to make right now — whether to pay their credit card bills, their rent or buy groceries,” said Mark Zandi, chief economist at Moody’s Analytics. Now, as the economy finds its post-pandemic footing, there are signs the hardship for millions of consumers will get worse before it improves. The average credit card interest rate — already at a record high 20.6 percent, according to Bankrate.com — appears likely to keep climbing, as the Federal Reserve indicated it could continue raising interest rates to get inflation under control. Student loan payments that were paused for more than three years are poised to resume in October. And banks and other lenders have been clamping down on credit for months, a process that accelerated after the spring banking crisis sent shock waves through the industry.

The Consumer Financial Protection Bureau (CFPB) entered into a proposed settlement with a ring of corporate entities operating some of the largest credit repair brands in the country, including Lexington Law and CreditRepair.com, according to a CFPB press release. The agreement follows a ruling from the court that the companies collected illegal advance fees for credit repair services through telemarketing in violation of federal law. If approved, the settlement would impose a $2.7 billion judgment against the companies. The order will also ban the companies from telemarketing credit repair services for 10 years. Lexington Law and CreditRepair.com are the largest credit repair brands in the country. The credit repair services are marketed and offered through a web of related entities in the Salt Lake City area, including PGX Holdings, Progrexion Marketing, and the John C. Heath, Attorney-at-Law PC law firm. During the time period relevant to the lawsuit, the companies operated nationwide and had more than 4 million customers who were subjected to telemarketing. In 2022, the defendants had combined annual revenues of approximately $388 million. The CFPB previously sued the companies to halt their illegal conduct and seek redress and other relief. In March 2023, the district court ruled that the defendants violated the advance fee provision of the Telemarketing Sales Rule. The Telemarketing Sale Rule provides a range of protections for consumers related to telemarketing and sets payment restrictions for certain goods and services. It requires credit repair companies to wait until six months after they provide the consumer with documentation reflecting that the promised results were achieved, before they request or receive payment from the consumer.

Student-loan borrowers are finding out that restarting a $1.6 trillion federal program is much more confusing than switching it off, the Wall Street Journal reported. With pandemic relief ending, borrowers will start owing interest as of Friday. They are learning of new payment schedules, often via email, from servicers they might have never heard of — and could be reluctant to pay. That is because about four-in-10 borrowers’ loans transferred to a new servicer during the pause that began in March 2020, according to government data. Millions more have graduated or otherwise left school during the pause and have never been required to make a payment until now. And many must consider a flurry of enticing, but novel, Biden administration changes to repayment plans and debt-forgiveness programs. The first payments are due as soon as Oct. 1. Borrowers must work with their servicers and government tools to determine the most beneficial repayment strategy. That includes an income-driven repayment option rolled out by the administration last week that could significantly lower their monthly payments and put them on a path to debt forgiveness after 20 years of compliance. They must also decide whether to make payments at all, or use a 12-month “on-ramp,” during which interest accrues but loans aren’t marked as delinquent or reported to credit-rating companies. The department has sent out early payment reminders via email this summer and is working with servicers to increase individual communications with borrowers, a spokesperson said. After Oct. 1, they will send notices to borrowers who didn’t make their first payment offering additional resources.

After a post-pandemic shopping spree, some Americans are becoming more selective with their spending as they struggle with factors like inflation, the New York Times reported. Although overall consumer spending remains strong, analysts say they detect worrying shifts in shopping habits. Financial reports this past week from retailers including Macy’s, Kohl’s, Foot Locker and Nordstrom suggest that consumers are no longer buying with abandon. Executives also flagged rising credit card delinquencies and higher rates of retail theft as ominous signs that consumers could be strapped for cash.

A U.S. consumer finance regulator sued a subsidiary of fintech lender Curo Group Holdings Corp on Tuesday, alleging it pushed struggling borrowers to refinance short-term loans to keep them in debt and reap fees, Reuters reported. The U.S. Consumer Financial Protection Bureau (CFPB) said in the lawsuit filed in federal court in Greenville, S.C., that Heights Finance Holding Co. violated laws against unfair and abusive lending practices by "churning" loans through repeated refinancing, putting around 10,000 borrowers in continuous debt from 2013 to at least 2020. The agency sought an unspecified fine, refunds for harmed consumers, and an order barring the company from violating the law. CFPB Director Rohit Chopra said that what the company "sold as a financial lifeline was, in reality, pushing customers into financial quicksand." Curo issued a statement on Tuesday saying the case related to small loans originated by subsidiaries of Heights Finance before Curo acquired the company for $360 million in late 2021 from private equity firm Milestone Partners.

For most people with federal student loans, the Supreme Court dashed their dreams of debt relief. Still, some borrowers are beginning to have their balances wiped away, Bloomberg News reported. The Department of Education recently began forgiving $39 billion in student debt for more than 800,000 borrowers that enrolled in income-driven repayment plans and had made monthly payments for at least 20 years. The Biden administration launched a one-time effort in April last year to correct administrative errors that had kept borrowers on the hook for repayments when their balances ought to have dropped to zero. Their clean slates are landing just as payments are set to resume on federal loans for the first time in more than three years.

Five years ago, there were a dozen models of new cars that sold for less than $20,000. In 2023, there was only one: the spartan Mitsubishi Mirage hatchback, which accounted for about 5,300 of the 7.7 million new vehicles sold in the U.S. in the first half of the year, the Wall Street Journal reported. If you are willing to spend more than $100,000, you can choose from 32 models. For the average American, paying off a new car at current prices demands 42 weeks of income, according to data from Cox Automotive, up from around 33 before the pandemic. Bargains have been hard to come by on the used-car lot as well, where the average vehicle listed for about $27,000 — up more than 30% from prepandemic levels, according to Cox’s data. Higher interest rates have made the situation more difficult for buyers. Today’s average new car loan has a monthly payment north of $750, with an interest rate of 9.5%. For used cars, the average rate is above 13.7%, according to Cox. The average term for loans issued over the past three years is nearly six years, according to data from Experian. Defaults and missed payments on pools of auto loans made in the first half of last year to people with subpar credit are matching or outpacing those issued in 2008, according to an analysis published last week by S&P Global that called the data “ominous.” The squeeze faced by borrowers might soon ratchet tighter, with a payment holiday for student loans set to expire at the end of the month. According to credit-reporting agency TransUnion, more than a third of consumers with student loans took on new auto loans during the pandemic.

Despite the decline in inflation since last year, families with young children still face sharp increases in one of their biggest expenses — child care, the Wall Street Journal reported. The national average price of daycare and preschool services rose 6% in July from a year before, the Labor Department reported recently. That was nearly double the overall inflation rate of 3.2%, which was down from its recent peak of 9.1% in June last year. Parents could see their child-care bills climb higher this fall as providers boost tuition to cover rising costs and federal pandemic aid ceases. Many child-care providers closed permanently early in the pandemic, and child-care prices rose more slowly than the overall inflation rate from March 2021 to February 2023, while many Americans worked from home. Child-care inflation has picked up since then as workers returning to offices fueled more demand, pay for low-wage workers jumped amid labor shortages, and prices kept rising for other items. Child-care workers earned an average of $19.95 an hour in June, up 4.6% from a year earlier, according to the Labor Department. That remained well below the average $33.50 an hour earned by all service workers on private payrolls, making it hard for providers to attract workers in a hot job market. Wages and benefits account for 50% to 60% of the costs for child-care providers, according to the Treasury Department.