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Student loan cancellation advocates are encouraged by recent moves by the Biden administration that signal he may act on eliminating some college debt for individual borrowers, but others remain skeptical that action will be taken on the matter during his first term, The Hill reported. Supporters of forgiving some student loan debt welcomed a recent announcement by Education Secretary Miguel Cardona that a fierce critic of the student loan industry, Richard Cordray, would head the department's office that oversees the loan portfolio. Cordray, a former Consumer Financial Protection Bureau (CFPB) director, was recently named chief operating officer of Federal Student Aid at the Education Department. Manju Bangalore, a student debt campaigner at Progressive Change Campaign Committee, said Cordray’s appointment was promising. “We believe he will stand up for student borrowers as he did in his position at CFPB. The time is now to cancel $50,000 of student debt and we look forward to Cordray being in the mix on this issue,” Bangalore said. The American Civil Liberties Union also praised Cordray’s appointment. The organization’s senior campaign strategist Rakim Brooks urged Cordray to cancel $50,000 of debt in an effort to help minority communities. “Canceling $50,000 in student debt would help close the racial wealth gap and support financial freedom for Black and Latinx borrowers who are disproportionately burdened by student debt, all while addressing this debt crisis for millions more,” Brooks said. But Biden has said that he won’t work toward canceling up to $50,000 in student loans, a favored amount being pushed by progressives, instead promising only to try to reach $10,000 per borrower.

Credit cards, auto loans and other personal loans are all getting easier to come by, more than a year into a pandemic that spooked lenders and caused them to tighten lending standards significantly, the Wall Street Journal reported. The net share of banks that loosened underwriting standards for credit cards hit a high in roughly the first quarter, according to a survey of loan officers conducted by the Federal Reserve. The net share of banks relaxing underwriting on other consumer loans such as installment loans also notched a record. For auto loans, that share was the highest level in more than eight years. For example, about 29% of banks eased their underwriting standards for credit cards in the first quarter, and only 2% tightened them, according to the Fed. About 19% of banks loosened auto underwriting, while less than 2% tightened standards. The loosening reflects a pandemic about-face in consumer lending. A year ago, lenders expected people to stop paying their loans en masse, and they made loans harder to get. But then the government stepped in with expanded unemployment benefits and stimulus checks, and the expected flood of defaults never happened. Now banks have a different problem: Loan demand is down. Many people are even paying off their credit card balances. And while that signals that Americans are faring well even in the pandemic, it is problematic for lenders looking to boost revenue.

The Biden administration is taking its first stand against for-profit colleges, signaling plans to increase scrutiny of the schools, Bloomberg News reported. The Education Department denied an appeal by Florida Coastal School of Law to participate in federal student aid programs, saying it failed to meet the required standards. The move marks a reversal from the Trump administration, which loosened oversight of such schools, and demonstrates President Joe Biden’s promise to stop them for potentially profiting off of students. For-profit institutions, like most colleges, rely on access to federal loans for enrollment. “We’re going to be tough but fair with the for-profit colleges under our purview,” said Richard Cordray, the department’s head of Federal Student Aid and a former director of the Consumer Financial Protection Bureau. Skirting standards is “not going to fly in this new administration. Whatever happened in the past, it’s a new day,” he said in an interview. Florida Coastal was denied because it received the department’s lowest financial responsibility score. It had too much debt, failed to provide advertised services, and its financial statements raised doubt about whether it could continue operations, the department said. The private-equity firm that owned 98.6% of the institution, Sterling Partners, relinquished control of the school last month, the department said.

U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints, which could add fuel to financial market fears of a lengthy period of higher inflation, Reuters reported. The report from the Labor Department on Wednesday also showed a strong buildup of underlying price pressures, extending a stock selloff on Wall Street. Most economists were, however, unwavering in their belief that the surge in prices would be temporary, noting that the main drivers of the bigger-than-expected inflation increase were hotels and airlines, industries that were hardest hit by the coronavirus pandemic. Bottlenecks in the supply chain, which led to a record jump in prices of used cars and trucks last month, were expected to ease. Federal Reserve Chair Jerome Powell has similar views. "This is not a sign of an inflation problem," said Robert Barbera, director of Johns Hopkins University's Center for Financial Economics. "We have the capacity to produce this stuff, we simply need time to get things back on line." The consumer price index jumped 0.8% last month, the largest gain since June 2009. The CPI rose 0.6% in March. A 10.0% surge in prices of used cars and trucks, the most since the series started in 1953, accounted for over a third of the increase in the CPI last month. That followed a 0.5% rise in March. Motor vehicle production has been hampered by a global semiconductor chip shortage, boosting demand for used automobiles.

Some of the largest U.S. banks plan to start sharing data on customers’ deposit accounts as part of a government-backed initiative to extend credit to people who have traditionally lacked opportunities to borrow, the Wall Street Journal reported. JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp and others will factor in information from applicants’ checking or savings accounts at other financial institutions to increase their chances of being approved for credit cards. The pilot program is expected to launch this year. It is aimed at individuals who don’t have credit scores but who are financially responsible. The banks would consider applicants’ account balances over time and their overdraft histories. The effort, if successful, would mark a significant change in the underwriting tactics of big banks, which for decades have enshrined credit scores and credit reports as the main tools to determine who gets a loan. They generally reflect a person’s borrowing history in the U.S., including whether they pay their loans on time. Those who pay only with cash or debit cards, or who are new to the U.S., often don’t have credit scores. Some 53 million adults in the U.S. don’t have traditional credit scores, according to Fair Isaac Corp., the creator of FICO credit scores. Many are often limited to payday loans and other costly forms of credit. (Subscription required.)

The Senate yesterday passed a resolution to repeal a rule governing partnerships between banks and third-party lenders that allow consumers to take loans with interest rates above their states’ maximum, The Hill reported. Senators voted 52-47 to pass a Congressional Review Act (CRA) resolution to revoke the Office of the Comptroller of the Currency's (OCC) “true lender” rule and forbid the agency from issuing similar regulations, with 49 Democrats and GOP Sens. Cynthia Lummis (Wyo.) Susan Collins (Maine) and Marco Rubio (Fla.) voting in favor of repeal. All 47 other Republican senators voted against repeal. The resolution now heads to the Democratic-controlled House, which is expected to pass the measure for President Biden’s signature. The White House said Tuesday that it supports the passage of the repeal resolution, arguing that the OCC’s rule “undermines state consumer protection laws and would allow the proliferation of predatory lending.” The OCC in October issued a rule intended to specify who is the true lender of a loan issued to a customer through a partnership between a nationally chartered bank and a third party, typically a non-bank lender.

The Biden administration wants the Supreme Court to pass on an appeal seeking to ease the way for more borrowers to erase their student-loan debt in bankruptcy, saying the Department of Education is already examining the issue, WSJ Pro Bankruptcy reported. The reasoning was laid out in a court filing Friday by the Justice Department, representing the latest front in efforts from the White House, Congressional Democrats and the U.S. court system to address student-loan debt. An estimated 43 million Americans have federal student loans, the total amount of which has nearly doubled over the past decade to about $1.7 trillion. Student loans are difficult to discharge through a bankruptcy filing. To qualify for a bankruptcy discharge, borrowers must prove they face an “undue hardship” from their student debts, such a stringent standard that few even try. The Supreme Court is considering whether to hear an appeal from a Texas woman seeking to loosen those standards after she filed for bankruptcy at age 60 with about $345,000 in student-loan debt — about half of which represents fees and interest. Thelma McCoy’s lawyers are asking to apply a more forgiving test, used by bankruptcy judges in some states, that would make it easier for those in extreme financial hardship to discharge student loans in bankruptcy.

Large card issuers that cater to borrowers ranging from the affluent to the subprime say that overall card balances — and thus the firms’ interest income — are falling, the Wall Street Journal reported. To make up for it, issuers are spending more on marketing and loosening their underwriting standards. Discover Financial Services said on its earnings call last month that the share of card balances that were paid off at the end of the first quarter were at the highest level since 2000. Capital One Financial Corp. said that nearly half of the credit-card balances it had at the beginning of March were paid off by the end of the month, which the company described as historically high. The companies’ calculations are based on the credit-card balances that they packaged into securities and sold to investors. Synchrony Financial, the largest issuer of store credit cards in the U.S., said payment rates have been higher than they averaged before the pandemic. Card balances at the three companies were down 9%, 17% and 7% in the first quarter from a year prior, respectively.