New York AG Going After Student Loan Providers

Attorney General Andrew M. Cuomo today revealed deceptive practices that he has uncovered in his nationwide investigation into the college loan industry. In a letter sent to every college and university in New York state, and certain other schools across the country, Cuomo warned them to end or fully disclose potential conflicts of interests in their relationships with private lenders. He also cautioned students and their families to protect themselves against these practices.

Industry practices revealed include: Establishment of so-called “preferred lender” lists without disclosing the basis for selection or the specific benefits associated with these preferred lenders; revenue sharing and other financial arrangements between schools and lenders; denials or impediments to a student or parent’s choice of lender based on the borrower’s selection of a particular lender or guaranty agency; impediments to competition in the lending industry that stifle better loan terms for students and parents.