February 13, 2020

Warren, Senate Democrats Press Lenders for Answers Following Reports of Higher Interest Rates for Students of Minority-Serving Institutions

Washington, DC -- Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Consumer Protection and Financial Institutions, Senator Sherrod Brown (D-Ohio), Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs, and Senators Bob Menendez (D-N.J.), Cory Booker (D- N.J.) and Kamala Harris (D-Calif.) pressed lender Upstart and other lenders and service providers for answers following a report from the nonprofit Student Borrower Protection Center that lenders may be charging higher interest rates to students who graduated from Historically Black Colleges and Universities (HBCUs) and Hispanic-Serving Institutions.

“The report found that a graduate of Howard University, an HBCU, would be charged $3,499 more over the life of five-year loan than a similarly situated graduate of New York University. Based on the racial demographics at these schools, these findings raise serious concerns that Upstart’s use of educational data may have a disparate impact on borrowers of color,” the senators wrote

The senators’ letter points to past concerns from regulators about the use of educational data to make credit decisions and calls on lenders to ensure that their underwriting practices comply with fair lending laws. The senators pressed Upstart and lenders for answers to their questions by February 27, 2020.

In November 2019, Senator Warren joined Senators Doug Jones (D-Ala.), Jon Tester (D-Mont.), and 35 of their colleagues calling for increased funding to HBCUs and other minority-serving institutions (MSIs) in a letter to Senate Majority Leader Mitch McConnell (R-Ky) and Democratic Leader Chuck Schumer (D-N.Y.) in favor of the FUTURE Act, bipartisan legislation that would reauthorize $255 million per year in mandatory federal funding.

Senator Warren has also worked with House Majority Whip James E. Clyburn (D-S.C.) to close the racial wealth gap by introducing legislation, the Student Loan Debt Relief Act, which would cancel student loan debt. Experts estimated that their bill would raise the wealth of black and Latinx families with student loan debt by an average of $15,700 and $27,000, respectively.