'Preferred Lenders' for Financial Aid: A Big Racket?
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]
(16) Comments
Access Group was also the preferred lender at my law school. I remember when I consolidated I ended up using Student Loan Xpress, probably because my school recommended them.
I had the worst experience ever. I basically had to threaten to sue them before they would consolidate my loan. The entire student loan business is so shaddy, so this article doesn't really surprise me.
Ugggggg tell me about it! And it only get's worse kiddies.... These private loans are unbelievable once you're out in the real world practicing! I know, I know, it seems like play money now, but you will pay through the nose! Rates go up whevever they want - loans constantly being sold to other banks!
The plot thickens at Columbia
http://media.www.columbiaspectator.com/media/storage/paper865/news/2007/04/05/News/Director.Of.Financial.Aid.Suspended-2825218.shtml
i hate kickbacks as much as the next guy, but isn't the ultimate responsibility for evaluating the terms of these loans on the student borrower? comparing interest rates among various lenders is not very diffcult if you have an internet connection and a few hours on your hands.
6:58, that sounds good in principle, but when your own school is telling you to go with their preferred lender, how many students would think "I bet this is just a big kickback scheme." A real estate broker advising you to use their preferred [escrow, title, lender, etc.] is one thing, but these are supposedly esteemed not-for-profit academic institutions.
I can't get anyone to lend me money because they know I won't get a job out of my tier 2 school!
Actually I can, but only because the lenders know it's not dischargeable. I will have to move back home and work miserable TTT jobs to pay it off.
if only: you don't have to be paranoid to check the numbers. in fact, you'd be silly not to, given the amount of money at stake. what the school tells you is easily verifiable - just look at the interest rate. if it's too high, google someone else. learning how to make a smart financial decision is probably more valuable than most of the things they teach you in school anyway.
I believe the Columbia official mentioned in the Times article is the undergraduate financial aid director, not the financial aid director for Columbia Law School. Separate entities. Of course, this doesn't mean that something like what happened in the undergraduate division did not happen in the Law School, but your source's view needs to be put in context.
TTT = ???
Translation, Theory, and Training?
Tic-Tac-Toe?
Teaching with Technology Today?
11:41,
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Very interesting post. I hadn't heard this before. It will be interesting to see what happens with this.
Great blog by the way!
Scott
www.thelegalscoop.com
Very interesting post. I hadn't heard this before. It will be interesting to see what happens with this.
Great blog by the way!
Scott
www.thelegalscoop.com
Very interesting post. I hadn't heard this before. It will be interesting to see what happens with this.
Great blog by the way!
Scott
www.thelegalscoop.com
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Imagine paying back 100k in private loans, with PRIVATE loan interest, while working one of these jobs:
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