Saturday, March 31, 2007
New York Attorney General Andrew Cuomo issued a press release stating that he found "deceptive practices in the college loan industry." His response was to send "letters to more than 400 colleges and universities cautioning them of potential conflicts of interest." His press release included seven areas in the student loan industry that are problems, including "Lenders pay financial kickbacks to schools based on a percentage of the loans that are directed to the lenders. The kickbacks are designed to be larger if a school directs more student loans to the lender. And the kickbacks are even greater if the schools make the lender their 'exclusive' preferred lender."