Coakley settles with college over lender issue
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Thursday that she has reached a $191,000 settlement with a college that allegedly misrepresented to students that they could only borrow money from one lender.
Newton, Mass.-based Lasell College allegedly told its students that they were required to get Stafford loans from Citizens Bank, even though other lenders provided less expensive Stafford loans.
Coakley alleged that during the years between 2003-2007, the college told students it would assist them in finding the most affordable ways to finance their educational expenses, but told Stafford loan borrowers that they needed to borrow from Citizens Bank.
"We are pleased that Lasell cooperated with our investigation and agreed to reimburse students for the extra costs that we believe students incurred by borrowing from Lasell's preferred lender," Coakley said.
"However, colleges and universities are in a unique position of trust and have a responsibility to provide lending advice that is in the best interest of students and untainted by conflicts of interest. Certainly, no school should ever attempt to restrict a student's abilities to obtain more affordable loans."
Under terms of the settlement, Lasell will reimburse $191,314 to over 1,000 students who had their first Stafford loan disbursement from Citizens Bank during the 2003-2004, 2004-2005, 2005-2006 or 2006-2007 academic years.
Coakley also alleged that between 2003 and 2007, Lasell's financial aid staff and its office of student financial planning received gifts and entertainment, meals and printing services from its chosen bank.
Since the college never disclosed these gratuities to those seeking the financial aid and did not claim that these gratuities did not influence its decision making process in choosing Citizens Bank as its only "preferred" Stafford lender, the students were not given all of the information necessary to obtain the loan with the best deal, Coakley claims.
Under terms of the settlement, Lasell has also agreed to new reforms that are intended to better protect borrowers' rights. These include instituting more transparency in its student lending process and eliminating conflicts of interest.
Coakley's office reached a similar settlement with Emerson College last summer. Emerson College allegedly steered students to borrow from certain lenders that gave undisclosed inducements to Emerson's financial aid staff.