Settlement Reached in New York Student Loan Probe

Attorney General Andrew M. Cuomo today announced that his office has signed settlements with major universities concerning student-loan arrangements between the schools and lenders. The settlements require schools to reimburse students money that the colleges were paid by lenders for loan business and to adopt a new landmark College Code of Conduct.

The schools include the State University of New York’s 29 four-year campuses (SUNY), Fordham University, Long Island University (LIU), New York University (NYU), St. Lawrence University, Syracuse University and the University of Pennsylvania.

At the same time, Citibank, the nation’s largest bank with student-loan business at about 3,000 schools, agreed to voluntarily adopt practices in the Attorney General’s College Code of Conduct, which will now govern Citibank’s student loan business practices with all schools.

Citibank also agreed to commit $2 million to a newly created national fund administered by the state Office of the Attorney General to educate college-bound students and their parents about the student-loan industry.

Under the settlements, schools will make the following aggregate reimbursements to students:

• NYU – $1,394,563.75 covering students who received loans issued over a five-year period.
• St. John’s University – $80,553.00 for loans issued over a one-year period.
• Syracuse University – $164,084.74 for loans issued over a two-year period.
• Fordham University – $13,840.00 for loans issued over a one-year period.
• University of Pennsylvania – $1,617,580.00 for loans issued over a two-year period.
• Long Island University – $2,435.41 for loans issued over a one-year period.

Cuomo applauded the cooperation received from Citibank and the schools that agreed to the settlements announced today.

“These schools and Citibank have made the responsible choice and are showing themselves to be industry leaders by being the first to take a major step in cleaning up a system laden with conflicts of interest,” Cuomo said. “We are beginning the process of restoring trust between universities and students and now is the time for other schools and lenders to step up and end the conflicts, perks and revenue sharing that have been costing students in New York and across the country dearly. These schools and Citibank are setting the example the entire industry should live by.”