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$85B/year student loan industry under criminal investigation

Posted by Charles II on April 7, 2007

Look for another segment of the credit industry to start melting down.

Inside Higher Ed (via  via Newshog  via The Sideshow):

New York Attorney General Andrew M. Cuomo revved up his campaign Thursday against what he just last week termed the “unholy alliance” between colleges and lenders. Not only did he announce an intent to file suit against the California-based Education Finance Partners (EFP) over the private loan company’s alleged “deceptive practices,” but he also named the names of 12 colleges allegedly accepting EFP’s “kickbacks”: Baylor, Boston, Clemson, Drexel, Duquesne, Fordham, Long Island, Pepperdine, St. John’s and Texas Christian Universities, plus Washington University in St. Louis and the University of Mississippi. (Many more were unnamed: Cuomo said more than 60 such “revenue-sharing” agreements with EFP exist).


“EFP aggressively offered schools cash kickbacks in exchange for business,” Cuomo said in a statement. He cited for instance the more than $100,000 Drexel University received in a single year …

In a nutshell, Cuomo charges that the private lender paid institutions in exchange for preferential treatment and a spot on their lists of “preferred lenders.” (Preferred lender lists, provided to students and compiled by a university, are a powerful tool in shaping which companies students choose for a loan: Cuomo estimates that 90 percent of students choose lenders from these lists.)

One Response to “$85B/year student loan industry under criminal investigation”

  1. I’ve been waiting for this to happen. And these same clowns are also selling the kids credit cards to further build up their debt peonage.

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