Reports: NY settling student loan cases
ALBANY, N.Y. --New York state is offering colleges settlements in its investigation into student loan kickbacks if the schools promise to follow a code of conduct, according to published reports.
Attorney General Andrew Cuomo sent settlement agreements to colleges around the country, the Chronicle of Higher Education reported Friday. If the colleges didn't sign, Cuomo threatened to serve them with subpoenas, the Chronicle reported.
Six lenders and more than 60 public and private colleges around the country have been swept up in Cuomo's investigation into the $85 billion college loan industry. His investigators say they have found numerous arrangements made to benefit schools and lenders at the expense of students. In some cases, investigators said, lenders provided all-expense-paid trips for college financial aid officers to exotic locations in return for directing students to the lenders.
A spokesman for Cuomo would not confirm the report.
"The attorney general has had talks with colleges and lenders as the investigation has been widening," said John Milgrim. "Any settlements, if and when they happen, will be announced when they are finalized."
Newsday reported Saturday that three colleges in New York state acknowledged getting the agreements. Long Island University, New York Institute of Technology and Dowling College officials said they received a "code of conduct agreement" from Cuomo's office Friday. The schools deny any wrongdoing.
Investigators found that many colleges have established questionable "preferred lender" lists and entered into revenue sharing and other financial arrangements with those lenders. Some colleges have "exclusive" preferred lender agreements with the companies.
While not illegal, Cuomo says such arrangements are deceptive and anticompetitive.
Under the terms of the settlement agreement, obtained by The Chronicle, Cuomo won't take action against colleges or their employees if they pledge to abide by the code of conduct and reimburse borrowers who took out private loans. The agreement prohibits college employees and trustees from accepting gifts from lenders, serving on paid lender-advisory boards, and entering into revenue-sharing contracts with private lenders.
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