Senate Banking Committee Chairman And New York Attorney General Call On Top 20 Us Lenders To Detail Underwriting Criteria
Thursday, June 07, 2007 -- United States Senate Banking Committee Chairman Chris Dodd and the New York Attorney General Andrew Cuomo have requested the nations top 20 student loan lenders submit details on their underwriting criteria in a joint letter sent today.
The letter specifically asks for any information or criteria that go into setting a loan's interest rate including "college, college location, graduation rate, historic default rate, race, gender, age, parental income, credit history and any other factors used or considered in an underwriting determinations."
The letter comes just one day after Dodd held hearings before the United States Senate Banking Committee on the growing student loan scandal. In testimony before the Committee, Cuomo described the private college loan industry as the "Wild West" of student loans.
The letter was sent to the following lenders:
CITIBANK - STUDENT LOAN CORP
JP MORGAN CHASE BANK
BANK OF AMERICA
WELLS FARGO EFS
WACHOVIA EDUCATION FINANCE
COLLEGE LOAN COPORATION
US BANK ELT NORTHSTAR CAP MRKT SERV
STUDENT LOAN XPRESS
COLLEGE FOUNDATION INC
Kentucky Higher Education Student Loan Corp.
Cuomo's nationwide investigation into the student loan industry has resulted in agreements with the nation's five largest student loan providers - Citibank, Sallie Mae, JP Morgan Chase, and Bank of America, and Wells Fargo - as well as with Education Finance Partners (EFP) and CIT. Additionally, a total of 25 schools have committed to Cuomo's Code of Conduct, nine of which have agreed to reimburse students over $3 million for the cost of revenue sharing agreements. Sallie Mae, Citibank, EFP, and CIT have also agreed to contribute $9.5 million to a national fund established by Cuomo that will educate high school students and their families about the financial aid process. Columbia University has also agreed to pay $1.1 million into the education fund as part of a settlement with the Attorney General's Office.
On May 7, 2007, the New York State Legislature passed the Student Lending Accountability, Transparency, and Enforcement (SLATE) Act of 2007, which was sponsored at the request of Cuomo and is the first piece of legislation in the country aimed at ending the widespread conflicts of interest the student loan industry. Governor Spitzer signed the SLATE Act into law on May 29, 2007.
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