CROSSCREEK WATCHDOG

From: “Your Money Advisor,” “A PayPal Student Loan Credit Line is Under Fire, by Ann Carrns, New York Times, August 22, 2000: Ann Carrns reports disturbing information about PayPal loans in the post-secondary educational sector. “A PayPal Student Loan Credit Line is under fire…as borrowers at some for-profit career schools are paying heavy interest charges…” Although PayPal principally promotes its credit program for on-line shopping, it also makes it available for short-term certificate programs that generally do not offer lower cost federal loan program options. Not only does PayPal charge double-digit interest rates, it charges late-fees of up to $40.00 per missed payment and also charges for its very aggressive collection practices. These practices have been described as both questionable and predatory.

It has been found that schools accepting PayPal Credit “include programs offering certifications such as home inspectors, make-up artists, flight attendants or body guards. Others offer instruction in hypnosis, aromatherapy and flower arranging.” Students and families should evaluate these and other technical and career programs carefully ensuring that they are not only accredited but state licensed, as well. According to Steve Gunderson, the president and chief executive of Career Education Colleges and Universities, even if a program is well regarded, unaccredited courses will not be accepted at two and four-year colleges.

Finally, in case of a PayPal Credit default, borrowers are charged debt collection expenses and, if the borrower dies, the borrower’s estate may be immediately attached for payment of the full amount. Conversely, federal student loans are forgiven upon borrowers’ death.