An investigation into student lending practices by New York Attorney General Andrew Cuomo could lead to criminal charges being filed, he says.
Cuomo says he believes cozy arrangements between colleges and the companies that lend their students billions of dollars are far more widespread than he expected. He wouldn’t divulge where the burgeoning investigation is headed. But he said his investigation of the $85 billion industry could lead to criminal charges against high-ranking officials at lending companies and universities.
“This is like peeling an onion,” Cuomo said. “It’s more widespread than we originally thought.”
Cuomo is investigating alleged kickbacks to school officials who steered students to certain lenders. His investigators say they’ve found numerous deals that benefited schools, financial aid officers and lenders at the expense of students.
Cuomo says he suspects that dozens of financial aid officers around the country have arrangements that he’s called deceptive, unethical and at times, illegal.
“No one is even defending the situation anymore,” he said. “When we first started, it was, ‘Oh, this is just a few bad apples.’ “
“Ninety percent of the students take the ‘preferred lender,’ ” he said. “Why? Because that’s the nature of the relationship. You trust the school. The school is in a position of authority.”
Financial Aid advisers at some schools sat on the boards of lending companies and received expensive perks such as trips to exotic locations. Naughty.—MEGHANN MARCO