Student Loan Scandal
Posted 18 Jun, 2007
We’ve been getting a lot of calls and e-mails lately from families who are concerned about the student loan scandal and how it will affect them. I’ll address that shortly, but first I’ll give you a quick explanation of the issues that have come to light over the past few weeks.
Upon his entrance into office, New York Attorney General Andrew Cuomo took up the investigative work begun by his predecessor Governor Elliot Spitzer: determining the verity of allegations against student loan lenders and financial aid administrators. Student loan companies were suspected of providing kickbacks to financial aid administrators, in exchange for listing their company on the college’s preferred lender list.
Continued exploration has uncovered further improprieties. Investigators discovered that various college officials sit on loan company boards, while others have accepted gifts of loan company stock. Previous news reports indicated that financial aid officers had received luxurious trips, electronics, and revenue‑sharing, based on how much students borrowed from lenders.
In April, after months of investigation, six colleges and several lenders such as Sallie Mae, Citibank, and Education Finance Partners, settled with Cuomo’s office. The NY Attorney General’s office has also drafted the College Lending Code of Conduct. Each of these colleges and lenders has agreed to abide by this new code.
Cuomo’s discoveries, as well as complaints received by the Department of Education, have prompted Congress to get involved. Investigations continue, and more unfortunate lending practices are coming to light.
So, how does this affect your family?
The bottom line is, if you already have loans and are not eligible for consolidation, you’re going to have to stick with what you have.
If, however, you are eligible for consolidation, or if you are planning to take out loans in the future, you need to carefully shop around for a reliable lender with low rates. This may mean going outside the college’s preferred lender list. Look for lenders who discount their interest rates—but be careful! Some lenders require a certain number of on‑time payments to qualify for discounts. You want to look for lenders who have a discounted rate—but no catch!
As always, my staff and I are here to support you and your family. Please feel free to call us if you have any further questions.
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding, a nationwide company that helps families find creative ways to reduce their college costs.
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We’ve been getting a lot of calls and e-mails lately from families who are concerned about the student loan scandal and how it will affect them. I’ll address that shortly, but first I’ll give you a quick explanation of the issues that have come to light over the past few weeks.
Upon his entrance into office, New York Attorney General Andrew Cuomo took up the investigative work begun by his predecessor Governor Elliot Spitzer: determining the verity of allegations against student loan lenders and financial aid administrators. Student loan companies were suspected of providing kickbacks to financial aid administrators, in exchange for listing their company on the college’s preferred lender list.
Continued exploration has uncovered further improprieties. Investigators discovered that various college officials sit on loan company boards, while others have accepted gifts of loan company stock. Previous news reports indicated that financial aid officers had received luxurious trips, electronics, and revenue‑sharing, based on how much students borrowed from lenders.
In April, after months of investigation, six colleges and several lenders such as Sallie Mae, Citibank, and Education Finance Partners, settled with Cuomo’s office. The NY Attorney General’s office has also drafted the College Lending Code of Conduct. Each of these colleges and lenders has agreed to abide by this new code.
Cuomo’s discoveries, as well as complaints received by the Department of Education, have prompted Congress to get involved. Investigations continue, and more unfortunate lending practices are coming to light.
So, how does this affect your family?
The bottom line is, if you already have loans and are not eligible for consolidation, you’re going to have to stick with what you have.
If, however, you are eligible for consolidation, or if you are planning to take out loans in the future, you need to carefully shop around for a reliable lender with low rates. This may mean going outside the college’s preferred lender list. Look for lenders who discount their interest rates—but be careful! Some lenders require a certain number of on‑time payments to qualify for discounts. You want to look for lenders who have a discounted rate—but no catch!
As always, my staff and I are here to support you and your family. Please feel free to call us if you have any further questions.
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding, a nationwide company that helps families find creative ways to reduce their college costs.
Subscribe in a reader
Subscribe by Email
Credit card debt is taking over the country, and most people are charging more due to the recession. This is not uncommon, however, the time is going to come when it is time to repay all of those debts and when that happens, hopefully those of you who have charged more because of lack of money will have what you need to pay off the debt. However, if you are one of the millions of Americans who find yourself in a difficult situation when it comes time for payback, then it is time to collect debt consolidation information from whatever sources that you can find.
When considering what debt consolidation information to use, the first thing that you should do is consider the source. Where did you get the information that you are using, is it an official source? You can get a lot of information about debt consolidation on government websites, which are very reliable sources in the respect that their information will be unbiased and will not direct you to a specific company to use for your debt consolidation.
You will learn in detail from your debt consolidation information about the two different kinds of debt consolidation, credit card consolidation loans and credit counseling services. These are two very different programs, where taking a loan means just that, however, if you have a lot of debt or bad credit you may have to use your home as collateral or get a co-signer to get the loan, which may not be idea. Credit counseling services mean that you allow a company to negotiate with your creditors for lower payments and to eliminate your interest. The downside here is that you have to close all credit accounts or the credit counseling service will not work with you, also, this does show up as a negative on your credit report, although not as negative as not paying your debts.
There are a couple of other options that may not show up in your debt consolidation information like credit card debt settlement, which is paying a company to negotiate lump sum payments with your creditors at a value less than what you owe. Another is to just do it yourself, without the help of any companies. The upside here is that your credit is not affected if you continue to make payments on your accounts. The ultimate goal for any of these plans is to pay off your debt as quickly as possible.
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