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Is ‘learn Now, Pay Later’ Just Another Student Debt Trap

Is ‘learn Now, Pay Later’ Just Another Student Debt Trap

By Anna Helhoski

The ‘buy now, pay later’ transaction is simple: Shoppers are offered an installment loan at the point of purchase, spreading the cost of the product across several payments. They’re often available without a credit check.

Buy now, pay later financing has become a go-to payment method at most major retailers for everything from clothing and cosmetics to computers and patio furniture.

Now, it’s gaining traction for an even bigger expense: higher education.

Buy now, pay later is an appealing, flexible financing concept, but customers who can’t keep up with payments can end up with late charges or interest they can’t afford.

Just as buy now, pay later can be a debt trap for the wrong shopper, education and consumer advocates fear that ‘learn now, pay later’ could be a similar pitfall for students — and often with much higher stakes.

One fundamental issue: You can’t return your hours of education like you can a dress or a laptop.

“There’s this deep and fundamental incompatibility with buy now, pay later and education financing,” says Ben Kaufman, director of research and investigations at the Student Borrower Protection Centre, a nonprofit organisation that advocates for student loan borrowers.

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“Is there ever a worse place for that to be than higher education when there isn’t even collateral underlying the product?” THE TROUBLE WITH BUY NOW PAY LATER TO FINANCE SCHOOL Buy now, pay later financing options are typically offered by schools that don’t qualify for federal financial aid, such as short-term certificate programs (think truck driving and cosmetology schools) and coding boot camps offered by for-profit institutions.

Student outcomes vary widely in the for-profit industry, and the worst actors have been accused of…

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