Reining In The Loan Arrangers

The push to stop student loan kickbacks continues, and appears to be gaining even more strength in Albany and nationwide.

State Attorney General Andrew Cuomo got on the phone Tuesday for a conference call with his counterparts in more than forty other states. They are also very interested in ending the sweetheart deals between colleges and lenders.

On Tuesday, the University of Texas System told its 15 campuses to stop posting preferred lender lists for students seeking loans and asked financial aid offices to report any benefits they’ve accepted from lending firms.

It was the latest action in a nationwide investigation of the $85 billion student loan industry pressed by Cuomo after it began with inquiries under former Attorney General Eliot Spitzer. Several lenders and colleges and universities have already settled lawsuits and adopted Cuomo’s reforms.

The Associated Press

su-logo-money.gifStudents at Syracuse University and several other schools that were paid kickbacks, commissions, rewards- whatever you may choose to call them- will be reimbursed by the lenders.

The New York Times reports that legislation is being proposed in Albany to bar colleges from getting a cut of the profits, when their students take out loans to finance their schooling.

It’s a system that needs to be stamped out nationwide, and that is apparently going to happen, with the help of authorities in other states and in Washington, as we told you a couple of weeks ago. Students are already bearing a heavy enough burden, without having schools double-dipping into their pockets for tuition money and the cost of borrowing it.

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