New York Attorney General Andrew Cuomo said Wednesday that three more lenders have agreed to adopt a code of conduct for student lending.
In a press release, Cuomo said Wachovia Corp. (WB), National City Corp. (NCC) and Regions Financial Corp. (RF) have all agreed to the code, which prohibits financial arrangements between schools and student lenders, bans gifts to college staff members and institutes disclosure standards and restrictions on how preferred lenders are chosen.
"With this agreement, the six largest providers of student loans in the country have signed on to my office's code of conduct," Cuomo said in a statement. "With each agreement, more students and families are protected from corruption, more lenders and schools are compelled to reform their practices, and more integrity is restored to the student loan industry."
The code of conduct grew out of a probe of the student-loan industry by Cuomo's office and has been adopted as law in New York state. Earlier this week, attorneys general in 32 states, including Cuomo, wrote a letter to Congress urging passage of similar legislation at the national level.
Cuomo has alleged that a number of providers of student loans have improperly paid schools to steer loans their way and put them on preferred-lender lists through revenue-sharing agreements.
Some lenders also engaged in other improper activity, such as funding trips for college financial-aid officers and providing personnel to staff call centers and college-aid offices, Cuomo said.
Earlier this week, Cuomo said he is also looking at lenders who use underwriting practices that take the school a student attends into account in making lending decisions, a practice he has equated to so-called redlining in the home mortgage industry. Some lenders are scoring students and parents based on the school they attend, rather than their individual creditworthiness, he said.
Units of CIT Group, Citigroup Inc. (C), SLM Corp.(SLM), Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Education Finance Partners Inc. have agreed to adopt the code.
Sallie Mae, Citigroup's Citibank Student Loan Corp., EFP and CIT's Student Loan Xpress Inc. unit also have agreed to donate more than $9 million to a fund to educate college-bound students about the student-loan process. Columbia University and Johns Hopkins University in Baltimore also have agreed to contribute to the fund.
So far, 26 universities, including New York University, Syracuse University and the University of Pennsylvania, and the National Association of Student Financial Aid Administrators have agreed to adopt the code of conduct. Ten schools also have agreed to reimburse students more than $3 million in money paid under revenue-sharing agreements with lenders.Labels: academy awards, education online, financial aid, free college, free education, high school, scholarship, student loans, study abroad |
