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News, Views and Careers for All of Higher Education

April 20, 2007

The Battle Is Joined

It was only a matter of time: New York’s attorney general plans to sue a college for the first time in his expanding student loan investigation. And his target — Drexel University — accused the state official of unfair tactics and vowed to fight back.

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Andrew M. Cuomo announced Thursday that his office would sue Drexel University over its revenue sharing agreement with Education Finance Partners, which has earned the university about $250,000 since 2005, according to the “notice of proposed litigation” that Cuomo released. Under the terms of Drexel’s agreements with the lender, Cuomo charges, Education Finance agreed to pay Drexel between 0.75 and 1 percent of the net value of private (non-federal) loans originated by the company, and the Philadelphia university agreed to promote Education Finance to its students as a preferred loan provider.

The attorney general’s legal notice claims that Drexel has broken state consumer law by engaging in “unlawful and deceptive acts and practices.” Those practices, Cuomo alleges, include (1) failing to tell students about the lender’s payments, creating “unlawful conflicts of interest on the part of Drexel and may have misled the student borrowers and their parents,” and (2) “fostering the false impression to student borrowers and their parents that Drexel, which is in a position of trust with students and their parents, is a lender or lender partner” on Education Finance’s loans, because the company used Drexel’s name and logo in its promotional materials. (Education Finance itself agreed to settle with the attorney general this week in the face of a threatened lawsuit.)

Late Thursday night, Drexel’s president, Constantine Papadakis, released a strongly worded statement that both defended the university’s practices and accused Cuomo of underhanded tactics. University officials, Papadakis said, have “carefully reviewed our practices” and satisfied themselves that “there is no conflict of interest or untoward behavior on the part of Drexel University,” adding: “Drexel will vigorously defend its position in this matter and will fully respond to any lawsuit in due course. We believe the allegations are without foundation in law or in fact.”

Papadakis went on to say that Drexel had responded with “full disclosure” to the attorney general’s initial inquiry in February (the university was among dozens of recipients of a Cuomo letter seeking information about student loan practices). “We received no communication from the Attorney General’s office until today when a letter regarding his intent to sue was sent to our undergraduate newspaper and then forwarded by our students to our legal counsel,” Papadakis said.

“The timing and public release of the attorney general‘s notice of intent to sue raises troubling questions as to his motivations and to his tactics,” the Drexel president added. “Indeed, his conduct violates fundamental principles of fair play to which Drexel and its students are entitled, and therefore we will move forcefully to protect our position in this matter.”

Many legal observers have speculated in recent weeks that one college or another ultimately would stand up to the attorney general, testing his authority to bring legal action against colleges outside the state and to challenge practices (like revenue sharing agreements) that they have been deemed permissible under federal law. (Cuomo’s news release about the legal action against Drexel asserts that he has such authority because “Drexel solicits and corresponds with students from New York, and New York students and their families rely on Drexel’s representations about preferred lenders; the New York Attorney General therefore has jurisdiction over Drexel in this matter.")

Cuomo vowed to proceed. “This investigation is a two front battle: lenders and schools,” he said. “We have proceeded against lenders and now we are proceeding against schools. There is no reason for a school not to adopt the Code of Conduct. This office has been clear to schools: settle or we will commence litigation. Either way we will get justice for students.”

Four other colleges did what Cuomo wanted: They settled. The attorney general said that Pace and Salve Regina Universities, Molloy College and New York Institute of Technology all had agreed to alter their practices and to sign the code of conduct that Cuomo’s office is promulgating, both for individual colleges and lenders to sign and as legislation that would apply to all colleges in New York State.

Under their settlements:

  • Salve Regina agreed to reimburse $7,840 to students, covering the amount the Rhode Island university received through its revenue sharing agreement with Education Finance, which was one of its preferred lenders. In addition, according to Cuomo’s office, several lenders provided services or paid printing costs for the university, or provided meals or lodging for its employees at loan workshops or advisory board meetings.
  • New York Institute of Technology accepted payments from lenders in the form of sposorships of university events and scholarships, according to Cuomo’s office, and used a lender’s contributions (or lack thereof) as a criterion in putting together its list of preferred lenders. Cuomo also said that lenders such as Sallie Mae, Citibank and College Loan Corp. had paid for meals and trips to student loan conferences for the university’s financial aid officers.
  • Molloy College, on Long Island, agreed to return to Education Finance more than $1,600 it had received through a revenue sharing agreement with the lender, according to Cuomo, and asked that any future revenue due to it under the agreement go toward reducing student loan payments.
  • Pace University, in the Westchester County suburbs of New York City, was one of numerous colleges that contracted with Sallie Mae to staff a financial aid call center for students, and the Sallie Mae employees “wrongfully identified themselves as Pace University employees,” the attorney general’s office said. The Cuomo statement also said that a Pace administrator who oversaw student loans and “advised Pace to drop the federal direct lending program and enter into contracts with Sallie Mae subsequently went to work for Sallie Mae after leaving Pace.” The attorney general’s statement said that “[t]his administrator may have had an inappropriate relationship with Sallie Mae while employed by Pace.”

Pace issued its own statement Thursday in which it acknowledged the attorney general’s findings in broad outline, but challenged some of his assumptions and conclusions, revealing some of the underlying tension within higher education over the questioning that Cuomo and Congressional lawmakers have done of some of the practices they are challenging.

For instance, Pace’s statement said that “we do not believe (and we have not admitted) that it is illegal or a conflict of interest for us to outsource various functions, including call centers,” as it did in one case with Sallie Mae. “We have not found any basis to believe, nor has any evidence been presented to us, that Sallie Mae call center personnel engaged in any steering of Pace students or their parents to Sallie Mae products or that Pace’s students or their parents were harmed in any way by our agreement to outsource the call center.”

Similarly, the Pace statement said, while university officials were “unaware of a possible conflict by our former enrollment management director at the time of our negotiation of the 2004 agreements with Sallie Mae ... we have found no evidence, and none has been presented to us, that the agreements were illegal or, equally important, that any of our students or their parents were harmed as a consequence of our entering into those agreements.” The former official, Pace said, “was not the decision maker regarding our contracts with Sallie Mae. Other university officers, in consultation with university counsel, conducted independent analyses and reached independent decisions on the basis of their assessment of what was in the best interest of our students, their parents and the university.”

Negotiated Rule Making

As Cuomo made his announcement about the latest of his campaign to rein in perceived excesses in the student loan industry — a campaign in which Democratic Congressional leaders are also increasingly active participants — a group of lenders, financial aid administrators, and Education Department officials were holed up in a Washington office building in their last of four meetings to negotiate possible changes in federal rules governing the loan industry.

As recently as a month ago, when the negotiating panel last met, the department’s proposed approach to strengthening its oversight of lenders and financial aid officials was seen by lenders and college officials as aggressive (too aggressive, for some of their tastes). Among other things, the department’s proposals would require colleges to have at least three lenders on any list of “preferred” providers, to publicize the process and criteria they used to craft that list, and sharply restrict the benefits and gifts that lenders can bestow on colleges and borrowers. Some student loan officials grumbled that the department, in getting tough now, was trying to cover the fact that the Bush administration has been perceived as taking a lax approach to regulating the loan industry in recent years — the latter view shared by advocates for students and other critics of the loan industry.

But given what has unfolded in the five weeks since then — Cuomo initiated his campaign three days after the negotiators last met, and his office and Congressional leaders (along with enterprising reporters) have unleashed a virtually nonstop barrage of damaging findings and accusations that have put lending companies and some college aid officers alike on their heels. In addition, the lawmakers have put forward recommendations for much more radical restrictions on the practices of lenders and colleges (and the interrelationship between the two) than the department had proposed.

Those facts have made the proceedings of the federal negotiating panel, which continue today, seem rather tame, if not downright irrelevant. At a time when Cuomo’s code of conduct and proposals from members of Congress would bar college employees from receiving “anything of value for serving on the advisory board of any lending institution,” under any circumstances, for example, the rule making negotiators were fighting over a department proposal that would prohibit such payments only if they could be proven to be given in exchange for a lender’s receiving access to a college’s loan portfolio.

“Our legal authority here is tied to inducements,” Brian Siegel, a lawyer for the Education Department, explained at Thursday’s session. “While there’s been a lot of public discusion about advisory committees and the benefits or perks that may be provided to people who serve on these committees ... it only becomes an enforcement issue for us if there’s a tie to [a college’s loan] volume or loan applications.” He added: “We do not have authority under this structure to ban [lender advisory committees] or to say how they’re structured in terms of compensation or benefits.”

But Congress does, and encouraged and stimulated by Cuomo, Congressional leaders (including, surprisingly, some top Republicans) seem to have a growing appetite to consider wholesale reforms in the loan industry, which gave Thursday’s proceedings of the federal rule making committee a rather empty feel.

— Doug Lederman

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Comments

Fight on, Drexel!

It’s important that somewhere along the way Cuomo’s tactics and legal strategy are tested in a court of law, not public opinion. At that point, the Pennsylvania AG, who probably has jurisdiction over the university as a non-profit, state-chartered institution, should intervene.

Fight on, Drexel. Call Cuomo’s bluff.

adwhite, at 7:50 am EDT on April 20, 2007

finally

I was starting to think that Cuomo didn’t intend to ever bring one of these schools (or lenders) to court.

Drexel’s protestations that they had cooperated with the NY AG right up to the point that they were sued is irrelevant to the school’s actions. They took the money when they shouldn’t have. They steered students to a particular lender in an apparent quid pro quo.

Schools and lenders are in an uproar (as are many financial aid officer associations) not out of any feeling of fair play, but because they’re circling the wagons. There are a lot of complicit schools and lenders out there.

This is all a dress rehearsal for 2008. When evil lenders dangle money before doe-eyed schools, Joe and Mary Six-Pack are gouged both by interest rates on little Johnny’s loans, and by taxpayer subsidy of FFELP. Democrats will aid their constituents (education community), while the Bush Administration can’t/won’t lift a finger to help theirs (evil banks).

Gotta admit, it’s a pretty compelling story to tell. If this doesn’t put zip in the Direct program, nothing will.

finaidfollies, at 7:51 am EDT on April 20, 2007

EFP is not a FFELP lender. This is an alternative loan company. It is interesting that in all these attacks on schools and lenders the fact that the real problems are with alternative loans (which the government has no control over) and not the federal student loan industry.

Julie, at 8:25 am EDT on April 20, 2007

It’s unfortunate that our schools are under attack this way. Has anyone taken a look at the BORROWER BENEFITS our students are receiving as a result of those schools who do have preferred lender lists? Aid administrators are always looking for the best possible scenerio for their students...many times it’s reflected in price and many times customer service as well as other services to assist students are also a consideration. Both FFELP and Direct Loans have value. It should be the school’s choice— not the government’s— on which program would better serve their students. Furthermore, our government officials should be looking out for our students. I ask again— have they seen the borrower benefits being offered? To sacrifice that would only harm our students. Who’s going to watch out for them if the aid officer’s hands are tied? It’s confusing enough for them to have to weed through the federal financial aid forms—especially if selected for verification. The real issue should be the rising cost of tuition in our country— and the fact that grant programs have not kept pace. And since when is competition for business (which results in more competitive benefits for students) a bad thing? The last time I checked, I lived in the United States of America. When will our STUDENTS’ needs be put before some politician’s personal agenda?

Justice for Students!, at 9:26 am EDT on April 20, 2007

Hey finaidfollies

Who do you think subsidizes the gov and DL? Canadians?

Tom, at 10:05 am EDT on April 20, 2007

Public Opinion Matters “Bunches"!

Laws evolve from”public opinion”… Allocations of public funds for education are also impacted by “public opinion”. It’s all about fiduciary responsibility, whether real or perceived — legal or moral. This is a “hot potato” for all institutions of higher education!

Dianne, N/A at N/A, at 10:24 am EDT on April 20, 2007

I am a financial aid administrator at a small school and we serve a lot of low income first generation (many minority) students and families. The financial aid process is very confusing to them and we do a lot of hand-holding to help. I cannot imagine how they are going to go out on their own and try to find a lender (one that will provide good service and benefits and help them through the process) without the benefit of a lender list to choose from. Yes, we screen our lenders for service and benefits. We have 17 lenders on our lender list.

My school has used both the Felp and Direct programs. We decided to leave the Direct program a few years ago because for a small school with a small financial aid staff it was difficult to manage. Felp was simply easier for us. I still believe in the Felp program and would hate for the decision as to which program to participate in be taken away.

I just hope that student needs are not forgotten in all this uproar. I am not opposed to reform but I am a firm believer in the ability to provide a lender list to my students.

FA Administrator, at 10:50 am EDT on April 20, 2007

Drexel Decision

Drexel’s decision reminds me of the charges of price fixing by a number of the Ivies in the late 1980’s. The “overlap” group was accused of fixing financial aid for new applicants. While the practice ceased. MIT did not agree with the accusations of the Department of Justice. After DOJ investigated, MIT was cleared of any charges. Drexel’s decision to partner with a private lender for private loans benefited both the student and the school. This wasn’t a decision made solely by the Financial Aid Director, I assume. But had the approval of higher level administration. These were not federal loans with federal subsidies. But a private loan program, which filled the gap left when the federal loans are not sufficient to meet educational costs.

Dr. Pat Watkins, at 10:50 am EDT on April 20, 2007

TRUTH ABOUT TAX DOLLARS

FFEL has saved billions of dollars in tax payers money by preventing Defaults.Private lenders pay billions of dollars to the federal government in default prevention fees that actually off set those dollars. Cost are not being measured equally.The default rates in 1992 were at almost 22%nation wide.as of 2004 it was down to 5% and continues to stay stable today.With all this tax payers dollars that is being wasted on this attack, is it going to fix one student from being in student loan debt?NO, it will not.College cost will continue to rise, students will continue to have to borrow.FFEL is one of the only loans known that actually gives money back to the borrower.If i could get money back from my mortgage by making on time payments, will I chose that.Darn right I will.Do I want someone with political agendas to stop it, I would be furious.Would you like your mortgage to get money back or would you like to just pay it because it cost the tax payer less money by you not getting any money back? Defaults is what hurts the tax payer and FFEL pays billions of dollars to try to prevent it and have done a heck of a job and the numbers show it year after year.

DON WILLIAMS, at 11:16 am EDT on April 20, 2007

Direct Loans

In my opinion, Cuomo and Kennedy probably have two end games here: 1) drive as many schools back into Direct Lending as possible (socialism vs. capitalism), and 2) to open up the remaining FFELP market to MRU in exchange for campaign contributions funneled through some obscure, no-name PAC. And they thing financial aid officers are unethical???

BD, at 11:35 am EDT on April 20, 2007

STAND STRONG DREXEL

HURRAY!!Stand strong against this bully politician.I am a Grad student and according to everything in this country,if the government is envolved than you can be sure they are up to something. Also, with the amt of loan money I am borrowing, if I make my payments on time, I will in the end have saved $2987 off my principle balance.I do not feel my school mis lead me in any way.However, my roomate went to a school that is in the government program and she is getting nothing off her principle balance..a big fat nothing.I think I pick the private lender i have over hers.Anyone with me on that?Law Student

Nick Austin, at 12:51 pm EDT on April 20, 2007

Wake up!

There have been some very well-stated comments made in regard to this disgraceful attempt to earn national notoriety by misrepresenting an entire industry due to the sins of the few. The attacks are disingenuous and reprehensible. I would like to point out a few reasons why.

Direct Loans charge higher origination fees than most of the guaranteed loan providers in the FFELP program. The assistance offered to schools varies between slim and none. FFELP schools are being assailed for not offering choice but Direct Loan schools offer only one—Direct Loans! Cuomo complains there are conflicts of interest in FFELP and yet the same politicians who created FDSL are the same people promoting it and passing legislation in support of it! Cuomo and Kennedy do not want schools to receive gifts of value in excess of $10. Do you think that law will carry over to the relationships between our elected officials and lobbyists?

As far as the revenue-sharing programs go, it has been argued that students were not receiving the best rates possible because of these sweetheart deals. Our journalistic community has re-printed this claim ad nauseum without any evidence! Why doesn’t someone of integrity check the terms those students were receiving? Bet your boots those students were getting very competitive rates and the school was getting funds in return that the majority have been using for need-based aid. For shame! Then ask those students how many of them would have provided to research the several thousand private loan programs currently offered on their own, without the assistance of the Financial Aid Office?

And, saving the most absurd for last, this is a federal program! If politicians believe the student loan providers are making too much money in special allowance payments from the government (see taxpayer), the simple solution is to reduce those premiums! If students are paying too much on their loans, cut the interest rate. And no, not the way Democrats have proposed—a phased-in reduction over five years which applies only to subsidized loans. Cut rates, period! And by the way, someone ought to investigate the money that is paid to the federal government by private loan holders for the mere privilege of participating in the FFELP program! You see, ladies and gentlemen, your esteemed elected officials are only concerned about students when someone other than government is making money off of them.

Anonymous Lender Rep, at 1:36 pm EDT on April 20, 2007

FINAIDFOOLISH

finaidfollies objects to being steered.

Does he or she object to health insurance companys’ lists of preferred providers, who cut deals with insurers on the basis of patient volume?

Does the insurer pass 100 percent of the savings on to the plan member? Nope.

Public opinion is everything, as Lincoln said. A resolution in a court of law, however, will help shape the public’s opinion of these practices—the schools’, Cuomo’s and the lenders’. Let the chips fall where they may.

adwhite, at 1:36 pm EDT on April 20, 2007

$10 Fundraiser

I hope Cuomo, Kennedy, & Miller are resrticted to a $10 per plate funder raising dinner. Enjoy the happy meal!

They will let a university pay $4 million a year salary for a football coach, but heaven forbid a lender have a table give away worth more thean $10 at a state conference.

None of them have told us how they controling the rising COA.

Bill, at 2:45 pm EDT on April 20, 2007

I find it interesting that “Inside Higher Ed” is promoting Campus Door student loans. Now, is that in the best interest of our students? I know of lenders that have better terms than Campus Door. How much $ is Insider getting to promote Campus Door?

Christine, at 3:06 pm EDT on April 20, 2007

FINAIDFOOLISH

HELLO, that is exactly what happens.The more people you insure in a company, the less the cost of the insurance.Everyone in America has the right to borrow student loans.Not everyone in American can aford to pay the price of health coverage that insurance companies charge you if you do not have a company subsidizing the insurance.Speical deals? You act like the financial aid people put it in their own pocket.The deal is for the student to get the lowest rate, best borrower benefit for their loans.The money for revenue share is not even legal on Federal Subsidized Loans it is done from private loans.I would hope to beleive that any college that is wise to use any loan program that would benefit students is using it to help the student. If any student is reading these threads, please know that any lender that has ever been on my lender list, has never done one thing that hasn’t been in your best interest.Don’t let these people fool you that these financial aid people are in some way stealing your money; they are not!They go through great research to make sure they are getting you the best deal out there and those are the facts.Don’t be fooled by this crazy talk and really consider the real facts.FFEL pays fees on your behalf so that you receive the loan in full while the government takes the fees from the top of your loan and yet still makes you repay the entire loan amount plus the interest.The program is run by the government, both FFEL and DL.The rules are made by the government for both FFEL and DL.The limits are set by the government for both FFEL and DL.Therefore, the government wants to play the game and make the rules.In other words, if you want to play in my back yard, I get to make the rules and they always get to fall in my favor or I’ll accuse you of cheating.It does not matter that you worked out everyday to improve your performance and I sat and did nothing.I still get to make the rules and I want all the candy that goes with it.

Kay, at 4:25 pm EDT on April 20, 2007

...the ones, anyway, that say that the fin aid community isn’t benefiting in some unseemly way. Yes, the great majority of aid professionals work very hard, and often for unfairly low wages, and in highly reactive office environments to boot.

But not Tom. He obscures the issue when he retorts that both FFELP and DL receive subsidies. Of course they do Tom. DL gets admin costs swept under the budgetary rug when program comparisons are being made.

What Tom fails to mention is that under FFELP, lenders are guaranteed a certain rate of return, or profit, for their participation in the program.

When prevailing interest rates are higher than the federal loan interest rate, the government makes quarterly subsidy payments to make up the difference between the payments from the borrower and what the lender could be earning outside of the federal loan program. Folks, we’re not talking chicken feed here.

Julie, the problems are with both alternative and federal loans. Lenders are entering deals with schools which require guaranteed thresholds of federal loans. In return they are providing alternative loans to students who would not otherwise qualify for these loans (due to creditworthiness). The loans provided under this arrangement are at ruinously high interest rates. Needless to say, the students in this category are nearly 100% of the time the student cohort with the greatest unmet financial need.

There should be, as Justice for Students points out, more choice for schools—sometimes schools are forced into either FFELP or DL for reasons that have nothing to do with the merits of either program. Yes, the real issue is rising tuition; it’s risen, on average, double the rate of inflation since 1958 according to a recent College Board paper.

Don Williams is quite right that defaults are way down from their high of 22%. If Don were to chart that decrease, he would notice that there is a direct correlation between defaults and interest rates, which trended downward all of the time that defaults were going down. Most of the default reduction was for macro reasons, not efforts of the lenders and servicers. In fact, Don fails to mention that guarantors routinely game the amount of defaults they permit before they hit the ‘trigger’ that reduces the reinsurance amounts they get from Uncle Sam.

There’s also a lot of crocodile tears for these defaulted loans: the collection agencies retain a very high percentage of the collections they make on defaulted loans. SLMA projects this revenue could be one-third of their whole pie in a couple of years.

Seems like a lot of lenders are weighing in here. Buy me a drink at NASFAA if you want.

finaidfollies, at 4:05 pm EDT on April 21, 2007

Its about time someone looked into the practices of these Lenders and their relationships with schools. When I was in school, halfway through I was told by my financial aid counselor that if I wanted to stay in school that I would have to reapply for my student loans. with no explaination I was left with a choice, Leave school or get a “new” loan with who else but Sallie Mae. My counselor told me that the interest rate would be no more than 8% I felt that I could afford that so I reapplied. After I graduated I got my first repayment notice, With an interst rate of 18.9%, that about $900.00 a month could you afford that working right ou of school? Calling my shcool wondering what was going on the simply said tha I should have researched my options better, What options? wasnt that supposed to be the job of the so called financial aid “counselor".

ethan, at 7:00 am EDT on April 22, 2007

honesty: the best policy

It seems to me that this entire situation could have been avoided if the schools in question simply acknowledged that they were receiving a financial incentive to promote certain lenders. Even if it’s true that the lenders provided competitive rates, the presence of a kickback at least gives the appearance of a conflict of interest, and that appearance casts doubt on the fairness of the process whereby schools promoted lenders to their students.

joshua, at 7:05 am EDT on April 22, 2007

The high moral tone adopted here by those defending the virtues of bribes, kickbacks, and the efficiency of collection agencies is quite remarkable.

JAD, at 5:10 pm EDT on April 22, 2007

Finally, maybe students will quit getting screwed

I’m glad to see that at least somewhere and somehow, the problem of unfair lending to college students is getting addressed.

From my own personal experience, a college “Financial Aid” office is nothing more than a satellite office of a specific lender. Quite frankly when a student is going in, without information (frankly because there isn’t any), and while legally an adult, they have no idea what they are getting into, nor is anyone offering “Financial Aid” or “Financial Counseling".

College is a major expense that grows over time, and can easily end up costing more than a car, or a house, or both. No one tells you what you’re getting for this, a lot of paper work is shoved in front of you and you’re point blank told to sign or leave.

Then you get to the lender choice, and while holding your “corporate logo” pen, in an office filled with that “corporate logo” and staring at a sheet of paper where there’s a noticeable size difference in the fonts of the two lenders on the paper. . . . You meekly ask, “which one do I choose.”

Immediately these “counselors” look at you and tell you that they can’t give you any advice. You meekly continue to press them and ask what the terms and conditions are, “we don’t have those, you just have to choose” is the response.

So you try one more time and ask at least what the turnaround time is for each of the loan decisions, hoping that might provide some insight. Jackpot! They inform you that lender X will get back to you in some small and arbitrary time period, and that the other lender is slow and it may take up to 3 weeks, but it often takes longer.

So you choose, the lender in bold, a 2pts larger font size, and the same as the corporately logo pen you hold in your hand, and the same as all of the corporate logo items filling the office.

And from then on out you think everything is fine, then you graduate, then you wish you had had someone to tell you the real differences between the lenders were, to tell you what you were getting yourself into, what it was going to cost, and what you could expect.

Perhaps if there were a few more layers between the schools and the lenders we’d get that information, perhaps we would know what we’re getting into. And perhaps the schools and the lenders would actually try to assist the students that come to them.

Put some fear into the system, and hopefully it will begin to work!

Joseph B. Arrington, at 8:35 pm EDT on April 22, 2007

Ignorance is bliss

For everyone that has defended Cuomo and his extortion, shame on you. You, in your absolute ignorance and belief in the media, are simply fueling the fire of an AG that has Senate hopes should Hillary wind up as president of the US. (Gasp!)

First off, think this through...

You are 18 years old, have no job, no credit history, and absolutely no way to currently pay back loans. You walk into a bank and tell them that you want to borrow $20,000. What are they going to tell you?? They are going to laugh in your face and tell you...DENIED!!

College students are an incredible risk. Don’t believe me? Why don’t you check out default and deliquency rates for credit cards between the ages of 18-24. It is astronomically high.

What is really funny, is that the people complaining about these lending relationships are the same persons that took out $30,000 in private loans to fund their degree in liberal arts. They now can’t get a job, or pay off their loan. Nice job. So, now your complaing about the lenders due to your own failures.

Before you attack an industry that is not broken, and has allowed thousands and thousands of college students access to school, think about what you are saying. If the lenders weren’t here to fund your butts through school, you wouldn’t even have a chance.

Also, take a look at extortion in the dictionary. paraphrased...if you don’t do something, I am going to sue you. Then, take a second look at what Cuomo is doing, and write another message.

Mike F, at 9:45 pm EDT on April 22, 2007

The truth on student loans lies in the middle...

What Cuomo SHOULD be looking at:

1) Extremely high interest rates on alternative loans;

2) Predatory collection practices of collection agencies;

3) Stock options for CEO’s of major loan lending companies.

THESE are the really abusive practices within the student loan industry. They amount to BILLIONS, not just a few thousand dollars like so many of the cases cited so far.

feudi pandola, at 11:45 am EDT on April 23, 2007

FINALLY STUDENTS NOT GETTING SCREWED- THEN DO IT YOURSELF

First, that financial aid office chose all of those lenders because they would offer the fastest service and best borrower benefit.The lender that would have taken longer was not on their list and i can guarantee that.They wouldn’t be on there.Also you said yourself that you asked “what one do I pick” well if you had done your homework on the 250+ lenders that offer student loans, you wouldn’t have to rely on your student financial aid office to have done that for you and therefore narrowed it down to a few that would meet your best interest as a student. Look at the Grad students savings on his loan.I am sure he chose a lender from a list.How was that screwing him?Did you save that much on your mortgage?Doubt it.

As far as the default rates going down, i disagree with the interest rates being the reason. It may contribute, but the lenders are extreemly aggresive in their efforts to stop defaults.If you miss one payment on your loan they call and ask if they can help you.They offer solutions to whatever may be going on in your life such as hardship deferments etc.Prior to this great effort, defaults were through the roof.The point being made is that it cost tax payers for these loans and it needs to be clear that it cost tax payers when students don’t pay their loans.

Wake up everyone; wake up.This is more than just student loans here.This is nothing more than lies by the media to slant every story to make the story worthy.One article said “Student Loan Company doubles their volume".They didn’t put in there that another loan company lost over double their volume because of the new lender at the school taking over.The reason the new lender took over?It gave a better borrower benefit to the student with better savings.They failed to print one variable and not one truth about the information that lead to the increase in volume.Over and over I read stuff and know the other side of the story.I now know the press is printing very little that is truth in this whole mess. Therefore as Paul Harvey would say, here’s “The rest of the Story”

The government has set up all those forms you are talking about that the financial aid office put in front of you- NOT THE LENDER OR THE SCHOOL

The college set the tuition, room and board, fees- NOT THE LENDER

The biggest competition is the competition between the lenders.The hope of every lender is that you have to borrow the least amount of loan money possible to get through school.Lenders offer all types of scholarship dollars; education on planning for college; tips on saving money for college; and I could go on and on.

There are over 3000 colleges in this great country that employ over 20,000+ financial aid professionals. Out of those 20k+ there was less than one handful of directors in question.Do you think there is a problem seriously?Also those directors used poor judgement but they did nothing illegal.Still does not make it right and they should have used better judgement. Also I am so sick of hearing the kick back comment.These “kick backs” are all going back into scholarship dollars- free money- to students.I wonder if anyone knows how to print that?

All of those great programs that are out there by lenders will soon be gone if certain people get there way.So some day looking back when your neighbor’s loan is paid in full and you ask them how they paid it off so fast.They may be able to tell you that they were able to have a lender that took their last 6 months of payments off their loan because they made all their payments on time.Or they had a lender that after they made 36 on time payments their interest rate dropped to zero.Or they had a lender that after they made 36 on time payments they took 22% off their principle.

Think about that as the rest of the story because if Washington continues on this false agenda, get ready to pay 100% of your loan in full because there will be no breaks for you or your children.

PS I am from a school and not a lender rep but due to the witch hunt I would prefer not to list my name or what school I am from.

DJ

DW, at 10:15 am EDT on April 24, 2007

Higher Ed

Look where the fault lies. It’s always the same old story if you point a finger first all attention goes that way. Classic case of double standards, do as I say not as I do. These politicians should clean up their own backyard before they try to clean someone elses.Wake up America!

Thomas, at 4:55 pm EDT on May 2, 2007

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