Multi-state agreements reached in student loan investigation
NEW YORK - The firsts keep on coming in New York Attorney General Andrew Cuomo's investigation of the student loan industry.
Monday, Cuomo announced that his office has entered into the first multi-state settlements, only a few days after he filed the first lawsuit against a school.
Cuomo and Missouri Attorney General Jay Nixon reached an agreement with Washington University in St. Louis, and Cuomo and Illinois Attorney General Lisa Madigan reached agreements with DeVry University and Career Education Corporation.
Cuomo boasted that his Code of Conduct is being adopted outside his own state.
"Across the country, momentum is building behind our investigation into the student lending industry," Cuomo said. "The Code of Conduct is being adopted nationally as the paradigm for best practices in the industry."
Cuomo has said that his investigation has revealed inappropriate relationships between lenders and schools. He alleged that Education Finance Partners, against whom he filed his first lawsuit and with whom he recently settled, was put on schools' "preferred lender" lists because it offered a cut of its profit to those schools.
DeVry, based in Oakbrook Terrace, Ill., was paid $88,112 by Citibank, which has already settled with Cuomo, under a revenue-sharing agreement. It will reimburse the amount to affected students and sign the Code of Conduct.
"Illinois students are entitled to full disclosure of the criteria used to place lenders on the schools' preferred lender lists and should have access to all of the information necessary to ensure that they are able to choose the loan that is best for them," Madigan said. "We acknowledge DeVry University and Career Education Corporation for promptly adopting the College Code of Conduct. We will continue to review the school loan lending practices of all the schools in Illinois."
Career Education Corporation received $21,200 from two lending institutions, and will put that amount in a consumer education fund.
"Students and their parents often are presented with limited choices and information on lenders," Nixon said. "They may feel unempowered as consumers, being steered to particular lenders without receiving
sufficient data to make fully informed choices. We want to make certain our concerns about students being able to make informed decisions to get the best loan interest rates are fully addressed."
Washington University had a revenue-sharing agreement with EFP in 2005 but received no payments. It still adopted Cuomo's Code of Conduct.
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