Attorney General Cuomo Commences Westchester College Loan Education Initiative
New York, NY (June 14, 2007) - New York State Attorney General Andrew M. Cuomo today was joined by Westchester County Executive Andrew J. Spano and Superintendent of Schools Dr. Francis Wills at Todd Elementary School as part of his statewide educational initiative alerting students to pitfalls and new protections in the college loan industry.
Attorney General Cuomo briefed graduating Briarcliff Manor high school 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.
"The student bill of rights, for the first time, gives to students and parents across the state, the right to choose any lender, the right to get critical information about their lending practices, and the right to hold the lenders to high standards." said Cuomo "While it may not be gift-wrapped or green, it is valuable. This law gives students and their families the know-how to protect themselves from unscrupulous lenders and schools that may trap young borrowers using deceptive practices."
The Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007, passed unanimously by New York's legislature, requires broad disclosure and bans lenders from giving gifts in exchange for any advantages. The law 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 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 new law gives to students and parents 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 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.
Westchester County Executive Spano expressed his support and emphasized the importance of making high school students more aware of what they should and shouldn't do when seeking a college loan.
"With college getting more expensive every year, it's vital that students know how to get the best loans possible and not let themselves be taken advantage of," said Spano. "We've been preaching the perils of credit cards for years and this isn't that different. Students need to take the initiative and learn their rights when it comes to managing their finances and/or seeking a loan. I commend the attorney general for bringing this issue to their attention."
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.
"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."
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.
To download a copy of the Student Bill of Rights and smart tip sheets, visit www.ag.ny.gov.