Sally Mae and the Student Loan Swindle Message Board

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Non-Tech : Sally Mae and the Student Loan Swindle

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From: Grandk	3/18/2007 10:37:49 AM
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'An unholy alliance' gouges students: probe Colleges take loan kickbacks, N.Y. official says March 18, 2007 BY MARK JOHNSON ALBANY, N.Y. -- New York's attorney general has accused colleges across the country of taking kickbacks from student loan companies and reaping other benefits while making it harder for students to get better deals on their loans. New York Attorney General Andrew Cuomo said Thursday an investigation he began last month into the $85 billion student loan industry found numerous arrangements made to benefit schools and lenders over the students. In some cases, it found that lenders provided all-expense-paid trips for college financial aid officers to exotic locations in return for directing students to the lenders. Cuomo's office is investigating at least six lenders: the nation's largest student-loan provider SLM Corp. -- commonly known as Sallie Mae; Nelnet Inc.; Education Finance Partners Inc.; EduCap Inc.; the College Board; and CIT Group Inc. Cuomo said he is investigating at least 100 schools, including some Ivy League institutions. Cuomo said he has the authority to conduct a nationwide investigation because schools from across the country recruit students from New York. 'Preferred lender' lists There have been no criminal charges or civil lawsuits filed. ''There is an unholy alliance between banks and institutions of higher education that may often not be in the students' best interest,'' Cuomo said. Investigators found that many colleges have established questionable ''preferred lender'' lists and entered into revenue sharing and other financial arrangements with those lenders. Some colleges have ''exclusive'' preferred lender agreements with the companies. While not illegal, Cuomo says such arrangements are deceptive and anti-competitive. He told the Associated Press that the kickbacks he has uncovered could be illegal. In the process, students have been denied their choice of lender, or faced difficulty using that lender, hurting their chances of getting better loan terms, the attorney general said. AP

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