February 29, 2008

Cuomo Subpoenas Sallie Mae, Questions Textbook and Snack Deals

Washington — More details are emerging about the renewed campaign by New York State’s attorney general, Andrew M. Cuomo, to investigate financial conflicts of interest on college campuses.

In an annual regulatory filing, Sallie Mae, the nation’s largest student-loan company, said Mr. Cuomo had sent it a subpoena, dated February 11, seeking “documents and information relating to our direct-to-consumer Tuition Answer product.”

Sallie Mae said it began offering Tuition Answer loans in 2004, marketing them to students and their families through “targeted direct-mail campaigns and Web-based initiatives.” Students and parents can borrow up to $40,000 per year for college expenses through the program, which had $3.3-billion in outstanding loans as of December 31, Sallie Mae said.

The company announced recently that it was putting a greater emphasis on private loan offerings, like Tuition Answer, following cuts by Congress in subsidies for lenders in the government’s program of federally guaranteed loans. Sallie Mae said in its regulatory filing that it planned to cooperate with Mr. Cuomo’s investigation, without describing what the attorney general was seeking.

A spokesman for Mr. Cuomo said today that the attorney general was investigating whether colleges were taking fees from vendors in exchange for the rights to sell textbooks, snacks, and financial services on campuses. The spokesman, Jeffrey Lerner, told the Associated Press that students might not be getting full value for their money if their colleges chose vendors on the basis of how much money the companies were willing to pay to do business. No subpoenas have been issued in that investigation, Mr. Lerner said.

Benjamin M. Lawsky, a deputy counsel to the attorney general, told Newsday earlier in the week that Mr. Cuomo was broadening his series of investigations into financial improprieties on college campuses. Institutions including Dartmouth College also received subpoenas this month from Mr. Cuomo, asking about contracts with banks for college-branded credit cards. —Paul Basken

Comments

1. AG Cuomo is doing the public a great service by bring up this ssue. Campuses for too long got a free pass on these issues.

   — Francis X. Viggiano    Mar 3, 08:47 AM    #

2. Our college gives Pepsi an exclusive contract in exchange for cash for the college’s budget. Pepsi’s products cost our students more in the absence of competition from Coke and others. Hasn’t the college just snuck in a hidden cost to our students? Apparently Mr. Cuomo wants an answer to that question, too. Right on Mr. Cuomo!

   — Mike    Mar 3, 09:47 AM    #

3. When I was in college 10 years ago I was bothered by the fact that my campus only allowed coke products in it’s vending machines and at the stores. It makes me sick that someone has to FORCE these schools to be ethical. These schools are trying to cash in any chance they get. if they want to save money, how about cutting some fat off the top?

   — Azil    Mar 3, 10:17 AM    #

4. If colleges rely on vendors to provide income to them in exchange for the right to sell product on the college campus (a closed marketplace)- why is that a problem? It the school did not squeeze the vendor for the cash- the student would be paying more someplace else.
   The fact of the matter is that vendors expect to pay to play- and while colleges benefit, so to do the students.
   If you don’t like the school’s policy vote with your tuition dollars and attend some place else.
   Welcome to America and capitalism.

   — lyle living    Mar 3, 10:23 AM    #

5. Cuomo should keep up the pressure. Hey Andrew, next check out the fees that colleges charge. My daughter’s ivy league college charges $10 for transcripts. A small local foundation requires one after every semester (rightly so) to keep her $250 per semester scholarship going. THAT’S 4% of the scholarship—for what? (I just requested my transcript from Rutgers and it charges $0; its automated.)

   — Mary Ann    Mar 3, 10:32 AM    #

6. Come on people, isn’t this getting a bit ridiculous? Various ballparks, built with the help of taxpayer dollars and government subsidies, line their pockets with exclusive vendor rights every day. My alma mater has a Pepsi exclusive deal, and it’s actually cheaper to get a 20 oz. Pepsi their than it is at the local convenience store. My gut says that any money gained from these exclusive deals goes straight to the general fund to help keep tuition costs down. AG Cuomo’s heart was in the right place when it came to some of the loan issues, but this is getting silly.

   — Ed    Mar 3, 10:35 AM    #

7. These sweetheart deals are simply a hidden charge to the students and staff. Usually the company simply ups the price to cover the added cost of doing business brought on by the kickbacks to the school.

   Given that most of these deals are kept confidential, they could be considered bribery!

   — Ian    Mar 3, 10:42 AM    #

8. About #6. Did you actually write “to keep tuition down?” Are you out of your mind. $49,000 is keeping tuition down? Get real.

   — Mary Ann    Mar 3, 11:13 AM    #

9. I am still waiting on Cuomo to share with the public his executive summary regarding his lender relationship concerns from a year ago. What? Less than 1% of all schools had issues but the media picked up on 99% of the false issues no thanks to Cuomo’s attention. Prove me wrong about the less than 1% and share your findings with the public versus your incomplete investigations. I expect an educated person to summarize facts versus hunches and whims. Finish your first investigation and publish your findings or lack of them.

   — Skipper    Mar 3, 11:32 AM    #

10. I keep wondering what higher office Andrew plans to run for. He is certainly keeping his name in the headlines!

    — Elizabeth    Mar 3, 04:07 PM    #

11. Re Skipper’s comments:

    Anyone seen the roughly $13 mil in settlements from lenders et. al. received by Mr. Cuomo being put to public use?

    — Just Wondering    Mar 3, 04:54 PM    #

12. As a college administrator it’s very difficult not to feel attacked when I read the comments here. It seems that the general perception is that these fat cat college administrators are living high on the hog (pardon the clichés). But in my reality, and the reality for thousands of college administrators, this is not the case. The issue is that we have hundreds of colleges which fall all over the continuum. Some colleges may have too much fat, but I trust they are in the minority. My colleagues from all over the US are doing the work of several as we lose staff and funding. While Cuomo is digging up all of this expected graft, I hope he’ll address the huge gaps colleges face caused in part by the governmental funding cuts, administratively crippling aid/accreditation programs, rising cost of living etc. We constantly find ourselves in the position of trying to do more with less while honoring all involved, students, families, and staff. In my opinion I expect that like the investigation into student loans Cuomo may find a few out of thousands of administrators who are personally profiting from these deals with private companies. If there is crime and fraud definitely these folks need to be held accountable. But let us not be hypocritical about the real dollars and cents of higher education. Schools have to be creative in finding ways to close the gap between budget and expectations.

    — Concerned Citizen    Mar 3, 06:01 PM    #

13. I would highly recommend that since the financial aid administrators and their “cozy relationships” was last years news, look into other associations like the ones that work with the admission’s office and registrar’s office. When this information came out it was an agenda item at a meeting with my vice president and those who report to him. It was amazing to hear the things that he receives in exchange for the university using services. Truly unreal! I’d love to see more about our lobbyists and people we voted for and their “cozy relationships”. Let’s move away from the financial aid field and let us help our students. Never had trips or stock options and with the investagation it has shown who the bad apples are. MOVE ON, PLEASE and let me do my job!

    — Aid Administrator    Mar 3, 08:03 PM    #

14. Kickbacks in NY? Nooooooooooo. How can that be? Don’t tell me, let me guess. Would it have something to do with THE MOB?

    — monkd    Mar 3, 08:08 PM    #

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