Trenton,
NJ – Attorney General Stuart Rabner
announced today that his office and the
Division of Consumer Affairs have launched
an investigation into the student loan industry
in New Jersey in light of recent allegations
that lenders have made improper payments
to have colleges promote specific loan companies
to students. Sixty-one colleges and universities
in the state, the New Jersey Higher Education
Student Assistance Authority, and 17 student
loan providers were issued subpoenas in
the last two days.
“It
is unacceptable for the high cost of college
to be compounded by student loan rates inflated
by too cozy relationships between colleges
and lenders,” Attorney General Rabner
said. “Our investigation was launched
to determine whether colleges have been
improperly steering students to preferred
lenders that don’t have the best rates.
What we would hope and expect is that colleges
maintain preferred lender lists only with
students’ financial interests in mind.’’
Many colleges and universities have preferred
lender lists that students look to in deciding
what lender they should use to finance their
education. Recent investigations around
the country, and in particular in New York,
have revealed that some banks are paying
to become preferred lenders. The Attorney
General is concerned that by accepting such
compensation, colleges and universities
may be putting their own interests ahead
of their students.
The subpoenas seek information on revenue
sharing agreements, agreements to promote
lenders, benefits schools and financial
aid officers may have received, including
direct payments, dinners, golf-outings,
and travel expenses. The subpoenas also
seek information as to whether lenders’
employees have provided direct assistance
to financial aid offices, allowing these
lenders to have preferred access to student
loan borrowers.
First
Assistant Attorney General Anne Milgram
is overseeing the state’s investigation.
“We
will seek to determine whether students’
interests have been harmed by any arrangements,’’
Rabner said. “From the information
we receive we should be able to assess what
reforms may be necessary.’’
Lenders
served with subpoenas include Student Loan
Xpress, Sallie Mae, Wachovia Education Finance,
Nelnet, Dollar Bank, Academic Management
Services, Education Finance Partners, JP
Morgan/Chase, and United Bank & Trust.
Also
to be served with subpoenas are EdAmerica,
TERI, Citibank, Bank of America, Campus
Door, College Board, AFC, and Higher Education
Solutions.
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