BloomTech Fined $164,000 for Deceiving Student Borrowers

Tech training company lied about income share agreement loans

For-profit tech training school BloomTech has been fined $164,000 and ordered to cease student lending activities after findings that it deceived students into using expensive student loan products to finance their educations.

The Consumer Financial Protection Bureau (CFPB) found that BloomTech pushed students into education financing agreements that were actually loans that carried finance charges of $4000.

“BloomTech and its CEO sought to drive students toward income share loans that were marketed as risk-free, but in fact carried significant finance charges and many of the same risks as other credit products,” said CFPB Director Rohit Chopra. “Today’s action underscores our increased focus on investigating individual executives and, when appropriate, charging them with breaking the law.”

Since 2017, BloomTech originated at least 11,000 income share loans, with most of BloomTech students funding their tuition with these loans. Under almost all these loans, students who earn more than $50,000 in a related field are required to pay BloomTech 17 percent of their pre-tax income each month until they make 24 payments or hit a “cap” of $30,000 in total payments.

The CFPB investigation found that BloomTech pitched the financing agreements as "risk free" and stated they did not create debt. In fact, the agreements were loans with finance charges of around $4000. Missed payments triggered default, with the entire $30,000 due and collectible following a single missed payment.

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