Attorney General Cuomo Announces Settlement With The Seventh Largest Lender In The Country
NEW YORK, NY (July 20, 2007) - Attorney General Andrew M. Cuomo today announced an agreement with the College Loan Corporation (CLC), the seventh largest student loan provider in the country, to settle allegations that it provided perks to schools that placed it on preferred lender lists. Under this agreement, CLC will pay $500,000 to the National Education Fund established by Attorney General Cuomo. CLC has also agreed to comply with Cuomo's Code of Conduct.
"We are continuing to see the market correcting itself. More and more lenders are acknowledging their transgressions and accepting our Code of Conduct because they desperately need to regain the trust of students and their families," said Attorney General Andrew Cuomo. "The next step is for the U.S. Senate to pass the Sunshine Act making the Code of Conduct the law nationwide and permanently establish a high ethical standard for the student loan industry, to protect students and parents everywhere. We applaud CLC for its cooperation and willingness to adopt the Code of Conduct."
CLC is a private student loan company based in San Diego, California and the seventh largest student loan company in the country. An investigation conducted by Attorney General Cuomo revealed that CLC hosted financial counseling sessions on behalf of schools for students who were taking or had taken student loans. These sessions are required under federal law to provide lender-neutral information, but CLC misused them as a marketing opportunity.
In addition, the Attorney General's investigation found that CLC offered various perks to school financial aid offices and gifts to their personnel in order to be selected as a preferred lender by these institutions, including:
- Sponsoring advisory boards that provided meals, entertainment, and travel expenses to participating financial aid officers and school personnel;
- Providing personnel to work for financial aid offices at no charge during particularly busy periods;
- Providing free printed materials to approximately 565 school financial aid offices.
Schools from across the country participated in CLC sponsored advisory boards and listed CLC as a preferred lender, including: Boston College, Texas A & M University, University of California - San Diego, SUNY Albany, Florida International University, South Carolina State University, and Lake Forest College.
CLC joins 10 other student loan companies who have reached agreement with Attorney General Cuomo's office, including the six largest lenders in America - Citibank, Sallie Mae, JP Morgan Chase, Bank of America, Wells Fargo, and Wachovia - as well as Education Finance Partners (EFP), CIT, National City Bank, and Regions Financial Corporation. Sallie Mae, Citibank, EFP, CIT, Johns Hopkins University, Columbia University, Mercy College, Career Education Corporation, and now CLC have all agreed to contribute a total of $11.7 million to the National Education Fund established by Attorney General Cuomo. This fund is dedicated to educating and assisting the country's high school students and their families about the financial aid process.
Cuomo's Code of Conduct has become New York State law as the Student Lending Accountability, Transparency, and Enforcement (SLATE) Act of 2007. Proposed federal legislation regarding the student loan industry also incorporates Cuomo's Code of Conduct: the Student Loan Sunshine Act has been passed by the U.S. House of Representatives and is currently being considered by the U.S. Senate.
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