<p>"CUOMO EYES BIG 'SCAM' ON CAMPUS
AP
March 16, 2007 -- ALBANY - Colleges are taking kickbacks from student-loan firms and reaping other benefits while making it harder for students to get better deals on their loans, Attorney General Andrew Cuomo charged yesterday. </p>
<p>Cuomo said an investigation that he began last month into the $85 billion student-loan industry had already found numerous arrangements that benefit schools and lenders over students. </p>
<p>He added that he'd warned more than 400 schools, including all the ones in New York state, to end such practices and was investigating at least 100, including some Ivy Leaguers. </p>
<p>Also being probed are these lenders: the College Board, the CIT Group, EduCap, Education Finance Partners, Nelnet, and SLM, the nation's largest. </p>
<p>Cuomo said some lenders: </p>
<ul>
<li><p>Pay kickbacks to schools based on a percentage of the loans directed to them. </p></li>
<li><p>Foot the bill for financial-aid officers' trip to resorts. </p></li>
<li><p>Give schools computer systems and put school reps on the lenders' advisory boards. </p></li>
<li><p>And set up funds and credit lines for schools that place them on "preferred lender" lists. "</p></li>
</ul>
<p>While Cuomo is right in some circumstances, Cuomo is also being short-sighted by placing such generalities over financial aid officers...which I take great offense to. Our office has a "preferred lender list" and those preferred lenders print materials for us...and sometimes even assist us in minor FA processes during extreme emergencies. However, customer service is what drives our decision of who remains on our preferred lender list. For example...one lender rep never returns our phone calls...never stops by the office...students have complained about difficulties in resolving problems....we have removed them from our preferred lender list. Another lender who was on our preferred list and was absolutely WONDERFUL...when either us or a student would call, our situation was handled promptly and professionally. However, when other lenders decided to "eat" the 3% origination fee and this lender opted to charge the fee to students, off the list they went.</p>
<p>While some lenders and schools do violate law and participate in unprofessional business practices...there are many more who do not. Our lenders know that if the companies customer service declines...they are gone, no matter what offers they place before us. My supervisor and I (yes...there are only two of us in my office) review the lender list several times each year...and survey former students who have entered repayment...and use our own experience with the lenders....and filter out those whose primary focus has changed from students to self. Our motto is: If we cannot get resolution from the lender...odds are, the students are not able to either.</p>
<p>And none of the lenders on the list in the OP have been on our lending list in quite some time.</p>
<p>Obviously, New York's AG is looking for some positive press since this is not really news -- the Wall Street Journal highlighted these practices a year or so ago.</p>
<p>I just came back from a Financial Aid Administrators workshop where this was discussed...at it seems that the issue isn't as widespread as NY AG is leading people to believe. Congress recently discussed this issue in one of their Negotiated Rulemaking Sessions. Based on information revealed there...there has only been one documented case of inpropriety between a lender and school. Most of this is just a preconceived perception derived by people who want to force schools into Direct Lending.</p>
<p>i have a question...is it better to take loans to build up your credit even if you don't need loans? for example $X,000 is available in federal loans for me. should i just borrow half of $X,000 just to build up my credit?</p>
<p>taking on debt just for the sake of it is never a good idea. If you want to build a credit history, you can start with a low dollar credit card. For example, Bank of America offers a $500 card to college students with zero credit history. They will raise the limit over time as long as you are never late with payments.</p>
<p>But, if you are eligible for a subsidized stafford loan, it may be worth taking on if only bcos the government pays the interest while you are in school.</p>
<p>It depends on your ability to repay the loans in a timely. The penalties for being deliquent on student loans can be more severe than other types of credit.</p>
<p>well they're small student loans....lol. i'm not takin like $20k a year. how do ppl who take out like $20k a year on student loans pay it off with out being a delinquent?</p>
<p>That is beyond me, Ubiquity. I have felt like asking a few of my grad students that very question....but I feel it may be crossing the line. I mean, those students take $36,000 for two years...and the entire program only costs them about $16,000.00. It is absurd!</p>
<p>okay..well my parentals don't understand that taking a loan, if it's not necessary, is a bad idea. <em>sigh</em> they're comparing me to their friend's children who take out like $20k a year for oos schools like NYU. i'm TRYING to get the point across that a loan is bad idea but they don't believe me. they even threatened me saying if i don't accept the loan they wont pay for college. big whoop.....college is already paid for that's why i don't need a loan. <em>rolls eyes</em></p>
<p>subsidized loans the interest is paid by the federal govt while you are in school and you do not accure the interest. Regular loans you accrue interest form the start of the loan.</p>
<p>The controversy listed at the top just got worse: FinAid officers at Columbia, USC and Univ. of Texas held stock in the companies they were pushing students toward.</p>
<p>yeah, but the real question which no one is asking...did those FA Officers actually make the decisions about which lenders to use on their list? In our office...there are two people who decide on the Preferred Lender List but seven who counselor students. While I don't have any current connection to any of our preferred lenders (though I will be using one of them for my own student loans in the future), what if I did? What if I banked at one of the lenders....or if I held stock in one of them...or my husband worked for one? I have no say in who is placed on or removed from our lender list...but that information would never be told in these new articles.</p>