December 8, 2008

Attorneys General Announce Settlement With College Board Over Student Loans

Attorney General Andrew M. Cuomo of New York and Attorney General Richard Blumenthal of Connecticut announced today that they had settled with the College Board, resolving their investigation of the nonprofit organization’s lending activities.

The attorneys general found that the College Board had given discounts to colleges that agreed to list their loans on “preferred lender” lists.

The College Board had already ended its student-loan program, a move it said was the result of new restrictions on lenders and was independent of the investigation.

Under the settlement, the College Board will spend $675,000 on tools, including two new student-loan calculators to help students and financial-aid administrators find the least-expensive student loans. The College Board also agreed to adhere to the Mr. Cuomo’s direct-to-consumer marketing code of conduct if the organization resumes offering student loans.

The College Board said in a statement that it was pleased to have reached a settlement that was “forward-looking and focused on how the College Board can best serve students and families as they prepare to finance their college education.” —Beckie Supiano

Comments

1. Is it true that Land Grant Colleges are to provide free education to its residents? Or—- refund tuitions that have already been paid? This is in reference particularly to The University of Missouri system.

   — Carolyn    Dec 8, 03:59 PM    #

2. Where is the other $16 million dollars plus interest that AG Cuomo has collected? Why has it not been made available to families as was promised? I think the Chronicle needs to report on that questions?

   — John    Dec 8, 04:00 PM    #

3. John, Cuomo’s loot wasn’t promised to borrowers or families, but was supposed to be used to educate students about loans and financial aid – as if there wasn’t already more info out there on the subject than anyone could digest as it was. Cuomo, to the best of my knowledge, hasn’t even responded when invited by groups such as NASFAA to work together to put that money to the use it was supposedly intended for.

   I’m not rushing to the defense of anyone Cuomo punished, but let’s see where the money is, oh Mr. Protector of the People.

   — DS    Dec 8, 04:08 PM    #

4. The $16 million hasn’t been given to families because there aren’t any actual students that have come forward and been able to show that they’ve been harmed by any lender activities.

   — Tommy Boy    Dec 8, 04:17 PM    #

5. Number 4’s comment cannot go unanswered. Many students have been hurt by the student loan scandals, and it is not only the NY AG who has discovered it. The latest revelations come from the Iowa Attorney General, who reports how students were systematically encouraged to take out private loans with less favorable terms than competitors’ offerings, even before taking out Stafford loans.

   One can say that the student borrowers should have known better, but how? Lenders insist they cannot reveal their trade secrets. Colleges guard their enrollment management strategies, which often push loans onto the naive and unsuspecting, saying the strategies are proprietary information.

   The College Board gave discounts to colleges that listed their loan products. The discounts were for College Board products that often worked to the disadvantage of financially needy students, sacrificed on the altar of the college rankings god.

   Mr. Cuomo should be praised for his investigations.

   — Administrator    Dec 9, 09:15 AM    #

6. Cuomo should be commended, insofar as his investigations were instrumental in demonstrating exactly how corrupt and detrimental the liaison between academe and some lenders had become.

   There had been very vocal consumer rights groups who’d been rightly complaining about loan abuses for years. But it was the NYS AG’s actions which provided the impetus for these scandals to be covered in the general media. “Chronicle’s” exposes are to be noted, but the “Chronicle” is a very influential specialist news source. Which the the larger portion of the public does not generally read-to their own detriment. Coumo’s actions helped to bring the whole mess into local papers and the nightly news.

   There are clear concerns about “the College Board will spend $675,000 on tools, including two new student-loan calculators to help students and financial-aid administrators find the least-expensive student loans”. The problem is programs/calculators to do such tasks can be easily written to still unduly favor certain companies. On that front I’d hope Cuomo has the new calculators very carefully vetted. And of course half a million or so is not all that much of a fine when untold millions were made by such sweetheart abuses of policy and students rights.

   Concerning student loan relief for students and families afflicted by corruption within academe and the student loan industry, that’s a matter which will require federal interdiction. One essential move would be the restoration of very basic consumer lending rights. The problem of course is that an entire generation is in trouble because of the undue power given to the loan industry. So any remedy would have to include past conditions, which could be legally problematic.

   Outright Federal investigation of the student loan industry, and its undue control over USDOE policies and attendant legal and ethical issues could be another solution. A successful investigation (and gods know there are more than enough blatant abuses to investigate) could finally resolve the issue. If by no other means than to force the more abusive companies to the table in order to avoid asset seizure under such as RICO. The problem of course is the undue influence over government policy that the loan companies have bought over a generation. And the reluctance the government would have in taking such action, because of the potential short term effect on an already troubled financial sector.

   — Atana    Dec 9, 11:57 AM    #

7. The best thing college graduates from these universities can react is to return all letters asking for private donations/matching funds. Actually send your tax deductible and company matching donation ONLY to universities which do not have such practices, which means to the California Community Colleges. 49 STATES received Fs on affordabilty for families, and CA received a C, only because of the State of California’s community colleges. Being a Community College Mathematics Instructor while completing my PhD at a LA Pac 10 university, I can vouch for the afford ability and quality of the CA community college district.Some students from the University of California system actually preferred the CA Community Colleges for the first two years. No foreign graduate students lecturing and doing labs. Academics doing what academics do, like they do at Oxford and Cambridge. Small tutorial type courses, and not the 200-300 class size at many of the So-Called Flag State universities. And we wonder why we need to import graduate students. The undergraduate education at many state flag ship universities is appalling and unaffordable. Hopefully Obama will do something to bring American Undergraduate Education on par with the Graduate Education at Stanford, CAL Berkley, USC, the University of Chicago, Northwestern, Rice, UIUC, and Cornell.

   — KJJ    Dec 9, 03:14 PM    #

8. Blah, blah, blah, everyone. But what gives with the $16 million? I wonder how it was invested and what it is worth today? I’m certain our students are not any smarter because of it.

   — The Larch    Dec 12, 06:44 PM    #

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