Graduates of Historically Black Colleges May Be Paying More for Loans

[SummerMadness]

Graduates of Historically Black Colleges May Be Paying More for Loans

Financial firms may be discriminating against people based on where they went to college, a watchdog group says. In particular, the group found that a lender named Upstart appears to be charging higher interest rates on student loans to graduates of historically black or predominantly Hispanic colleges.

A lot more people are getting loans these days from a new breed of lenders known as fintechs, or financial technology firms. And some of these lenders factor in where loan applicants went to college.

The group applied for dozens of loans online — posing as a 24-year-old man. It said he lives in New York, works as a financial analyst and makes $50,000 a year. Each time the group applied for a loan, it kept a whole range of factors constant.

"The only difference was where he went to school," Welbeck said. It applied as if this fictional borrower went to NYU in New York, many other schools and Howard University — one of the country's most famous historically black colleges and universities.

The group found that if the otherwise identical loan applicant went to NYU instead of Howard, there was a striking difference. For a $30,000 personal loan with a five-year term, it found an applicant would pay about $3,500 more in interest and fees if they went to Howard.

 

[FireDragon76]

Is this illegal, or merely distasteful? I am honestly clueless on the law at this point.