Monday felt like the old days – all the way back in early 2007, when news about student loans flew so fast and furious that it was almost hard to keep up.
It probably felt that way, in part, because New York Attorney General Andrew M. Cuomo reared his head again in the student loan arena, announcing a $675,000 settlement with the College Board over its now-abandoned loan practices.
That agreement, which followed a finding by Cuomo’s office and Connecticut’s attorney general that the College Board had given discounts on some of its financial products and services to colleges that placed its loans on lists of “preferred lenders,” was one of several student loan-related news developments Monday.
- Significant numbers of for-profit colleges say their students have had trouble paying for college because they lack sufficient financial support, and 70 percent of the institutions say they have seen increases in students registering for classes but not showing up, according a survey released Monday by the Career College Association. More than half of institutions responding to the survey say they are providing their own loans to students to try to close the gap between their federal aid and the students’ cost of attendance.
- A new report by the Institute for Higher Education Policy and Excelencia in Education takes an in-depth look at those undergraduate students who are least likely to borrow to finance their educations, analyzing not just who they are (older, financially independent students, part-time students at community colleges, and members of certain ethnic or immigrant groups) but how their decisions affect their chances of succeeding in college (the impact is not good).
Cuomo and the College Board
When the College Board announced 16 months ago that it would no longer originate federal or private student loans, its officials hoped to bury questions about whether the admissions and financial aid giant – which is a trusted source of information for students and parents about college – might have conflicts of interest in profiting from private loans that its own analysts decry. But the inquiry by the New York and Connecticut attorneys general – while asserting that the board ceased its private loan operations “for reasons unrelated to the investigation” – suggests another layer of problems with the College Board’s now-defunct loan programs.
The investigation found that the College Board “gave significant discounts” on the products and services it provides to college financial aid offices (such as the PowerFAIDS software system and CSS/Financial Aid PROFILE) to “certain colleges in exchange for placement of the College Board’s loans on the colleges’ preferred lender list of student lenders,” Cuomo’s office said in a news release. In at least four instances, Cuomo’s office said in its 45-page settlement agreement with the College Board, the board gave discounts of between 6.3 and 24.6 percent off the price of the financial aid products, saving the institutions a total of $79,000, in exchange for being placed on the colleges’ preferred lender lists.
The Cuomo settlement states that the College Board’s federal loan volume (and, in turn, its profits) from the four institutions in question increased by a combined total of $130,000 after the preferred-lender agreements were in place. The settlement asserts, as did all of the many such agreements that the New York attorney general signed with lenders and colleges during his yearlong investigation into student loan practices, that the College Board violated New York business law.
“Loans are hard enough to come by these days; the last thing we need are deceitful arrangements like this one that stand squarely in the way of students and parents getting the facts,” Cuomo said in a prepared statement. “We should be doing absolutely everything we can to guide students to the least expensive, least complicated option for affording higher education. With their national reach and extensive expertise in higher education, College Board is the perfect entity for helping students and parents borrow smartly.”
The board did not admit any wrongdoing in the settlement, and its officials said in a prepared statement that they were pleased that the settlement is “forward-looking and focused on how the College Board can best serve students and families as they prepare to finance their college education.”