About Student Lending
The Office of the Attorney General's nationwide investigation into the student loan industry uncovered widespread illegal practices and conflicts of interest in the relationships between lenders and institutions of higher education and their staff. The investigation uncovered "revenue sharing" agreements in which lenders paid schools a percentage of the loans that students at the school took from the lender. The investigation also revealed that many lenders provided gifts, all-expense-paid trips, meals, and other perks to financial aid officials in exchange for placement on the schools' preferred lender lists.
The Office of the Attorney General developed a Code of Conduct for lenders and institutions of higher education that prohibited these practices. To date, thirteen lenders have committed to adhere to the Code of Conduct, including the largest lenders in the nation, and a number of lenders have contributed over $12 million to a national fund established by the Office of the Attorney General for educating and assisting students and families with respect to the financial aid process. In addition, twenty-six schools have agreed to adhere to the Code of Conduct, and a number of these schools contributed over $1.7 million to the Attorney General's national fund and reimbursed affected students over $3 million.
The Office also drafted and introduced a new state law, the Student Lending Accountability, Transparency, and Enforcement Act, or "SLATE," which made the Office's Code of Conduct the law for New York State. The Attorney General’s code of Conduct also served as the basis for a new federal law, The Higher Education Opportunity Act of 2008, which was enacted in August, 2008. With the passage of these laws, student’s rights are protected nationwide wherever they go to school.