Attorney General Andrew Cuomo Launches Broad Expansion Of Investigation Into Potential Conflicts Of Interest In The Student Loan Industry
NEW YORK, NY (February 1, 2007)—Attorney General Andrew M. Cuomo announced today an expansion of his ongoing investigation into potential conflicts of interest in the student loan industry.
Beginning today, more than 60 public and private universities nationwide will receive formal requests for information regarding the standards they use to determine which lending companies are included on their “preferred lender” lists. Financial aid administrators produce such lists to direct their students toward the lenders most preferred by the schools.
The Attorney General is requesting information pertaining to any financial arrangements the schools have with lenders that help the lenders get placed on the preferred lists, including records of any compensation lenders have given in exchange for placement on the lists. The Attorney General is also asking for the terms of the loans taken out by students and for information regarding any benefits offered to individual financial aid officers from lending companies.
"My office is seeking to ensure that students are being steered toward lenders offering the most competitive rates, not those who offer the best perks to schools or financial aid administrators,” said Cuomo. “Across New York and throughout the nation, people are struggling to keep up with the rising costs of college tuition, and allegations of trips and gifts from lenders to higher education officials raise significant concerns. When making recommendations on how to make tuition more affordable, there must be absolutely no conflict of interest at the expense of students and their families."
In November of 2006, the Office of the Attorney General commenced a preliminary inquiry into potential financial arrangements between universities and loan providers, requesting and receiving information from six different lenders, including Nelnet, Education Finance Partners, Educap, and Sallie Mae, a publicly traded company that controls a majority of the student loan market. Today, the Attorney General’s Office also sent requests for information to two additional lenders: the College Board and CIT.
The following is a list of states with the number of colleges and universities in each that were sent initial requests for information:
California – 10
Pennsylvania – 9
Massachusetts – 8
New York – 7
Michigan – 6
There were two each in New Jersey, South Carolina, Wisconsin, Texas and Colorado.
Requests for information were also sent to schools in Missouri, Delaware, Oregon, Tennessee, Mississippi, Rhode Island, North Carolina and Arizona.