Are student-loan companies providing college officials with kickbacks and other illegal inducements in order to encourage their students to take out loans from a particular lender? Sen. Edward M. Kennedy seems to think so. In a letter made public today, Senator Kennedy, a Massachusetts Democrat and chairman of the education committee, said he was concerned that “several private lenders may have offered or provided questionable favors or benefits to institutions of higher education, or to administrators at those institutions, in exchange for preferential treatment.”
Senator Kennedy sent copies of the letter to 16 lenders, including Sallie Mae, Nelnet, Citibank, Bank One, and Bank of America. The letter asks each company to provide any documents illustrating its “financial dealings with institutions of higher education involved in the federal-guaranteed student loan program.” In a separate statement, Mr. Kennedy said that he had heard about “a number of disturbing lender tactics,” including giving college officials free sports tickets and luxury-hotel accommodations. The senator said he would open an investigation “to uncover the facts concerning such inappropriate arrangements.”
The letter came nearly a week after the attorney general of New York, Andrew M. Cuomo, asserted in a letter to 400 college presidents that his months-long investigation into alleged illegal inducements had found a range of “problematic practices” that reflected “an unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest.” —Andrew Mytelka




