Attorney General Cuomo Brings College Loan Education Initiative To Capital Region
ALBANY, NY (June 12, 2007) - New York State Attorney General Andrew M. Cuomo today was joined by New York State lawmakers and school officials at Watervliet High School as part of his groundbreaking statewide educational initiative alerting students to pitfalls and new protections regarding the student loan industry.
Attorney General Cuomo briefed graduating Watervliet seniors about his Student Bill of Rights, the first of its kind in the nation. The bill of rights is part of a new state law resulting from the Attorney General's ongoing investigation of the $85 billion/year college loan industry, providing new rights and protections to safeguard students and families from deceptive practices.
"This bill of rights represents a valuable graduation gift," said Attorney General Cuomo. "While it may not be gift-wrapped or green, it does give students and their families the knowledge and the know-how to protect themselves from being taken advantage of by unscrupulous lenders and schools that practice unethical and sometimes illegal practices. A college education is expensive enough. The Student Bill of Rights, combined with New York's landmark law, will combat the industry's exploitation and help to keep college costs affordable."
The Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007 unanimously passed both houses of the New York State Legislature and was signed into law by the governor. Attorney General Cuomo distributed the Student Bill of Rights and Smart Tip sheets - including the top-ten questions to ask schools and lenders - to students at today's event.
The Student Bill of Rights codifies Cuomo's College Loan Code of Conduct, the basis for settlements with lenders and schools across the country. Congressional leaders have also endorsed SLATE as a national model. The bill gives to students and families the right to choose a lender, even if the lender is not included on the school's preferred lender lists. Additionally, the law grants the right to:
- To get unbiased advice about loans and lenders from schools' financial aid offices.
- To get the criteria a school uses to select preferred lenders.
- To know whether preferred lenders are paying the school or financial aid officers.
- To know what benefits or rate discounts lenders offer, and whether those benefits or discounts will be made immediately available, or only after a certain number of consecutive timely payments.
- To know if a lender has agreed to sell its loans to another lender.
- To know whether borrower benefits and discounts will continue if the loan is sold.
- To know the interest rate for the loan before borrowing.
- To exhaust federal borrowing options before turning to higher cost private loans.
Cuomo highlighted some of the worst practices identified by his office during his nationwide investigation into the student loan industry, including illegal steering to preferred lenders by specific schools, revenue sharing agreements between schools and lenders, university financial aid call centers staffed by lender employees, gifts and trips from lenders to a school's financial aid directors, and even stock in lender companies directly given to financial aid officers.
"We are committed to equipping all college-bound students with their legal rights so they can avoid the pitfalls of fraudulent lending practices," said Attorney General Cuomo. "Lenders should be selected and recommended solely for the best interests of the student and their family - not at the expense of their future."
Senator Neil Breslin said, "Students will now be able to rely upon educational institutions to obtain low-interest loans because of the work of Andrew Cuomo."
Assemblyman Jack McEneny said "Our college students should be able to rely on college financial aid officials for unbiased advice about their loans and grants. This bill is a major step toward restoring faith in the student loan industry and will force the banking industry to behave in a more ethical manner."
Assembly Majority Leader Ron Canestrari said, "As the cost of quality higher education continues to soar, so will the needs for families to finance part of that expense to ensure their children can continue their pursuit of knowledge and growth. The burdens of student loans are stressful enough without the added pitfalls exposed by Attorney General Andrew Cuomo."
Albany County Executive Michael Breslin said, "As County Executive, I see everyday how important it is to invest in the future of our children. Their future depends on a quality education. I applaud Attorney General Cuomo for his efforts to halt the student loan rip-offs that have deprived too many youngsters of a college education."
Albany Mayor Jerry Jennings said, "Through the efforts of Attorney General Cuomo, students will now have the assurance that they can borrow money to finance higher education costs, knowing full-well that such borrowing is occurring in an honest, forthright manner, one which is equitable for all."
To download a copy of the Student Bill of Rights and smart tip sheets, visit www.ag.ny.gov.
This year, the average annual cost of a four-year private college is $30,367 and about $13,000 at public institutions. Nearly 3 out of 5 New York undergraduates across New York State took out loans to pay for college education.