Colleges Screwing Students On Loans

In his first major investigation as Attorney General of New York, Andrew Cuomo says he's discovered something shocking; Colleges are getting kickbacks and benefits from six loan providers his office is investigating.

“There is an unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest,” Cuomo said. “The financial arrangements between lenders and these schools are filled with the potential for conflicts of interest. In some cases they may break the law.”

Cuomo has sent out warnings to hundreds of colleges, including every school in New York State (which would include my old school,) to end the practices. He says some of the schools he is investigating are Ivy League.

What did Cuomo find?

They discovered that many colleges have created questionable “preferred lender” lists and entered into financial arrangements with those lenders; because of this, students have been denied their choice of lender, or faced difficulty using that lender, hurting their chances of getting better loan terms...thus screwing them.

According to Cuomo, investigators found:
-Lenders pay kickbacks to schools based on a percentage of the loans directed to the lenders.
-Lenders foot the bills for all-expense-paid trips for financial aid officers to posh resorts and exotic locations. They also provide schools with other benefits like computer systems and put representatives from schools on their advisory boards to curry favor.
-Loan companies set up funds and credit lines for schools to use in exchange for putting the lenders on their preferred lender lists and offer large payments to schools to drop out of the direct federal loan program so that the lenders get more business.

Shameful. All the while, college graduates are left with a huge debt in the first years in the real world...and finding a job that pays off that debt isn't exactly easy to. I'm only 24, and I have plenty of friends in that situation, and to think this whole time colleges are getting kickbacks from lenders that limited their choices...for shame.

As for Cuomo, he has huge shoes to fill. His successor, now Governor Eliot Spitzer became the Greek God of Attorney Generals. There was much skepticism about Cuomo. This has perhaps proven he may be up to the task after all.