Andrew Cuomo, Eliot Spitzer, Law Schools, Money

'Preferred Lenders' for Financial Aid: A Big Racket?

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New York’s new Attorney General, Andrew Cuomo, has some big shoes to fill. Governor Eliot Spitzer, during his time as New York AG, was a very busy bee.
It looks like Cuomo has found a juicy scandal to sink his teeth into — one with possible implications for many of the law students among you. From the NYT:

The directors of financial aid at Columbia University, the University of Texas at Austin and the University of Southern California held shares in a student loan company that each of the universities recommends to student borrowers, and in at least two cases profited handsomely.

The personal stake of the three university officials in the company, now known as Student Loan Xpress, is the latest revelation in an expanding investigation by Attorney General Andrew M. Cuomo of New York into the relationships between student loan companies and universities. Student Loan Xpress is one of the “preferred lenders” recommended at all three universities.

Some interesting info from a tipster, after the jump.


The source who brought this story to our attention had some firsthand experience to share:

The law school financial aid office at Columbia pushes Access Group as “the” preferred lender. Access Group did the financial aid presentation at orientation and conducted the exit interview.

Last summer, I contacted Graduate Leverage and used their recommended lender for both my consolidation loan and my PLUS loan. Soon after I began the process, the financial aid office contacted me and “warned” me about using a lender that was not on their preferred lender list. The financial aid office wanted me to know that although Graduate Leverage did a presentation on campus, the event was sponsored by the Student Senate, not the financial aid office, and that the financial aid office does not endorse Graduate Leverage. Basically, they tried to make Graduate Leverage sound like a sleazy intermediary. I still went with the Graduate Leverage recommended lender.

I always thought that the financial aid office’s response was a little odd. Now I am beginning to understand why. My question for the financial aid office is, how much does Access Group have to pay to be such a preferred lender? And who receives the money?

College Officers Profited by Sale of Lender Stock [New York Times]

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