Student lenders, who have come under public and regulatory scrutiny over concerns about cozy relationships with school officials, will again be under discussion at a Senate hearing Wednesday.
The meeting will focus on the growth of the $85 billion-a-year student loan industry and its impact on college accessibility and affordability.
Through an investigation into the industry, New York Attorney General Andrew Cuomo recently unveiled arrangements between universities and lenders in which schools received some of the money lenders made from loans at those schools.
In some cases, the investigators found schools or loan officials were given incentives, such as gifts, to place loan companies on a school's preferred-lender list.
Cuomo in May said he had reached a $3 million settlement with Student Loan Xpress, Inc. and its parent company CIT Group Inc. (nyse: CIT - news - people ) The investigation revealed Student Loan Xpress sold or transferred securities to financial aid officers at several colleges and to Matteo Fontana, a senior Education Department official who was recently placed on leave due to the disclosure of his stock holdings.
Cuomo has already reached similar agreements with Citibank, Sallie Mae (nyse: SLM - news - people ), JP Morgan Chase, Bank of America (nyse: BAC - news - people ) and Education Finance Partners.
The findings led to new rule proposals designed to curb potential conflicts of interest.
The Education Department - which had been accused of failing to monitor school-lender relationships closely enough - proposed new rules that state schools must have at least three companies on a preferred-lender list and must explain how they were selected.
The House recently passed a bipartisan bill that would ban gifts from lenders to schools and impose strict controls on schools that publish approved lender lists to guide students to certain loan companies. The Senate hasn't yet acted but is expected to in the near future.Labels: academy awards, career training, education online, financial aid, free education, scholarship, student loans, study abroad |
