Attorney General Cuomo Launches Statewide Student Lending Education Initiative For High School Seniors
Buffalo, NY (May 24, 2007) - New York State Attorney General Andrew M. Cuomo was joined by Western New York lawmakers today to launch a statewide college-loan education initiative and outline a new Student Bill of Rights to protect students and families from deceptive practices found throughout the student-lending industry.
The initiative was launched at Cheektowaga's Cleveland Hill High School, where Cuomo and lawmakers told graduating seniors about New York State's landmark student lending protection bill - the first of its kind in the nation - which gives students and families clearly defined rights and protections. The Student Bill of Rights and Smart Tip sheets, handed out to students at today's event, include the top-ten questions students and families should ask lenders and schools.
"Today we are arming students and families with the knowledge of how to protect themselves from being taken advantage of by lenders and schools partaking in unethical and sometimes illegal practices," said Attorney General Cuomo. "New York's landmark law and the Student Bill of Rights will ensure that students and their families are protected from widespread exploitation uncovered by my office and help to keep college costs affordable."
By educating college-bound students before they begin the loan-seeking process, they will be armed with the knowledge of how the student loan industry works, and more importantly, how they can avoid being taken advantage of by lenders or schools that may try to use fraudulent lending practices," said Attorney General Cuomo. "There should be absolutely no conflicts of interest when schools or lenders make recommendations to people trying to keep college costs within their budgets.
The Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007 is designed to protect college-bound students from widespread conflicts of interest and deceptive practices exposed by Cuomo's ongoing investigation into the $85 billion-a-year student loan industry. The law codifies Cuomo's College Loan Code of Conduct, the basis for settlements with lenders and schools across the country. Congressional leaders have endorsed SLATE as a national model and dozens of schools and lenders have already adopted the Code of Conduct.
As part of SLATE, the Student Bill of Rights applies to students and families across New York State seeking to borrow money for a college education and includes the following rights:
- To unbiased advice about loans and lenders from schools' financial aid offices.
- To choose the lender, even if the lender is not included on the school's preferred lender lists.
- To know what 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.
Senator William Stachowski said, "I want to thank Attorney General Cuomo for leading the state in an effort to make student loans easier and safer, and for holding the lending industry accountable. With the SLATE legislation and the Student Bill of Rights, New York is ensuring that students and their families are protected when looking to finance a college education."
Senator George Maziarz said, "What we're doing in New York to protect students will undoubtedly be the model for the rest of the nation. Making sure that students and families know their rights, and then going after companies seeking to abuse those rights, is critical. This is a great example of working in a progressive, bipartisan manner to identify a problem and implement a sensible solution."
Assemblyman Dennis Gabryszak said, "With the ever increasing cost of higher education and Attorney General Andrew Cuomo's lead in uncovering national scandals in the student lending industry, it's right for New York's government to set a nationwide example protecting families and students. The new SLATE law achieves just that and is just another example of how we've been working to effectuate change and make government more responsive to citizens."
Assemblyman Mark Schroeder said, "New York's Attorney General has started his term on the right foot. Andrew Cuomo's approach to the student loan scandal is diligent and comprehensive. He is not only is going after the perpetrators of these crimes, he is also working with lawmakers on the Student Bill of Rights legislation that will help prevent students from being taken advantage of in the future."
SLATE was unanimously passed by both houses of the New York State Legislature May 7 during Cuomo's nationwide investigation into student lending practices. 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 tips to financial aid officers.
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.