Preferred Lender Scams: Now A National Story
Sometime back, in October actually, on Halloween, I talked about “preferred lenders” and how I felt the whole idea was a scam. Well now it’s been confirmed. Here are some excerpts from a recent CNN story:
“Investigation finds lenders give colleges kickbacks
NEW YORK (Reuters) — New York Attorney General Andrew Cuomo said Thursday an investigation into student lending practices found that lenders paid kickbacks to colleges and their employees for steering business their way, one of many practices that may violate state laws.
Lenders provided all-expenses-paid trips for financial aid officers and put school officials on their boards to curry favor with schools across the United States, Cuomo said at a Manhattan press conference. The probe showed that many schools, as trusted middlemen, too often recommend lenders that don’t necessarily offer the best deal to students.
‘We have found that these school-lender relationships are often highly tainted by conflicts of interest and, we believe, illegal, deceptive business practices,’ Cuomo said.
Cuomo said some two-thirds of college students take student loans and about 90 percent choose their lender from a list of preferred providers drawn up by the school.
‘These school-lender relationships are often for the benefit of the school at the expense of the student,’ Cuomo said. ”Preferred student lender’ often means preferred by the school at the expense of the student.’ ”
Touche! Great line by New York’s Attorney General.
I checked my Chicago Tribune this morning, but there was no mention of this story. This is a travesty. In case your not fluent in the higher education scene here, there are a number of major and minor colleges and universities in the metropolitan area. They include: the City Colleges of Chicago (6 campuses), University of Chicago, Depaul University, Loyola University Chicago, Northwestern University, Dominican University, Oakton Community College, Saint Augustine, University of Illinois at Chicago, Northeastern Illinois, and Saint Xavier. Even Notre Dame receives a lot of coverage here.
But with all these institutions, there was not a single mention – not a whisper – of the story in the Tribune. Interesting. Perhaps the Sun-Times or Daily Herald picked up the story? – TL
PS – I just saw that the New York Times also ran a story on this today.