Attorney General Cuomo Commences Downstate College Loans Education Initiative
New York, NY (June 8, 2007) - New York State Attorney General Andrew M. Cuomo today was joined by New York State lawmakers to commence a statewide educational initiative. Cuomo briefed graduating seniors about a ground breaking Student Bill of Rights, the first of its kind in the nation. The state law, a result of Cuomo's investigation, provides new rights and protections to safeguard students and families from deceptive practices in the $85 billion college loan industry.
"This graduation gift is not gift-wrapped or green, but it is valuable," said Cuomo. "We are committed to equipping college-bound students with their rights under law before they go out to seek loans. More importantly, we must prepare them for the pitfalls by educating them on how to avoid fraudulent lending practices," said Cuomo.
The initiative commenced at Stuyvesant High School, where Cuomo and New York's lawmakers educated seniors about the Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007, the new state law unanimously passed by both houses of the New York State Legislature. Student Bill of Rights and Smart Tip sheets were handed out to students at today's event and included the top-ten questions to ask schools and student loan lenders before borrowing.
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. The investigation uncovered among other things, 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.
"There should be absolutely no conflicts of interest when schools or lenders make recommendations to people trying to keep college costs within their budgets" said Cuomo. "Students, and their parents, should not be forced to mortgage their futures, limit their future employment prospects, delay home ownership, or worse, never attend college when they are qualified and want to attend because preferred lenders are selected for reasons other than best interest of students."
Assemblymember Deborah J. Glick said "I am gratified that confidence has been returned to the critical arena of student loans. The action of the Attorney General in identifying the problem and working with us to provide a solution should make all New Yorkers grateful that we have an intelligent and energetic Attorney General."
State Senator Martin Connor said, "As the ranking Democratic senator on the Banks Committee I applaud Attorney General Cuomo for shedding light on the unfair and unethical student loan business. As the parent of two college students, I am aware of how confusing the variety of loan practices presented to students by private lenders can be. I urge all college students and their parents to carefully consider the terms and conditions offered by various lenders. They should not just rely on one or two "recommended" lenders but they should shop around for loan terms that suit their needs."
State Senator Tom Duane said, "Attorney General Cuomo has done an extraordinary service in exposing these disgraceful student lending practices and in spurring the Legislature to take up and unanimously pass the Student Lending Accountability, Transparency, and Enforcement Act. Since our students and their families face a college loan industry fraught with deceptive practices and conflicts of interest, it is critically important that we are arming them with the information that they need to protect themselves."
"Students pursuing higher education need to have the best available information to make informed decisions about paying for their studies," Schools Chancellor Joel I. Klein said. "I applaud the Attorney General for equipping our students and their families with the necessary tools to do just that."
Nearly 3 out of 5 New York undergraduates across New York State took out loans to pay for college education. This year, the average annual cost of a four-year private college is $30,367 and about $13,000 at public institutions.
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