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JULES LEVENSON:Unethical loaning practices need to be condemned by all
by Jules Levenson
Columnists | 5/1/07
Posted online at 10:56 PM EST on 4/30/07
/ Last updated at 6:46 AM EST on 4/30/07
College is expensive; Brandeis cost nearly $33,000 in tuition alone for the 2006-07 academic year. When other factors such as room, board and personal expenses are factored in, this sum rises by over $10,000.
To offset these costs, students are forced to rely on loans from a multitude of sources. This debt can persist for years following the completion of formal education and can be a burden on people trying to start a business or build a family. For many, these costs are overwhelming.
Because of the difficulty so many students already have paying off loans, it is particularly alarming to hear reports of inappropriate loan practices. New York State Attorney General Andrew Cuomo has been investigating allegations that some student loan agencies have entered into revenue-sharing agreements with colleges and received preferred-lender status, thus increasaing the likelihood that students will take out loans with them. An Associated Press report quoted Cuomo as saying that six schools have agreed to reimburse a total of $3.27 million in overpayments from these revenue-sharing arrangements.
These six (five of which are in New York) are not the only problem spots, however. According to a different AP report, The University of Texas schools have been stopped from listing preferred lenders and Cuomo's office is investigating dealings between 100 colleges and 13 lenders. Not only that, a U.S. department of education official who was in charge of overseeing part of the college loan business was put on leave after it was learned that he had at one time owned as much as $100,000 in stock of a loan company at the center of the scandal.
My first reaction to this emerging problem was one of dismay, but not really of surprise. It's really quite disheartening to see students in such a vulnerable situation being taken advantage of. It's greedy and unethical to take excessive money from students, money that they didn't have in the first place. Lenders create all sorts of problems for students, just to enrich themselves and their partners.
To offset these costs, students are forced to rely on loans from a multitude of sources. This debt can persist for years following the completion of formal education and can be a burden on people trying to start a business or build a family. For many, these costs are overwhelming.
Because of the difficulty so many students already have paying off loans, it is particularly alarming to hear reports of inappropriate loan practices. New York State Attorney General Andrew Cuomo has been investigating allegations that some student loan agencies have entered into revenue-sharing agreements with colleges and received preferred-lender status, thus increasaing the likelihood that students will take out loans with them. An Associated Press report quoted Cuomo as saying that six schools have agreed to reimburse a total of $3.27 million in overpayments from these revenue-sharing arrangements.
These six (five of which are in New York) are not the only problem spots, however. According to a different AP report, The University of Texas schools have been stopped from listing preferred lenders and Cuomo's office is investigating dealings between 100 colleges and 13 lenders. Not only that, a U.S. department of education official who was in charge of overseeing part of the college loan business was put on leave after it was learned that he had at one time owned as much as $100,000 in stock of a loan company at the center of the scandal.
My first reaction to this emerging problem was one of dismay, but not really of surprise. It's really quite disheartening to see students in such a vulnerable situation being taken advantage of. It's greedy and unethical to take excessive money from students, money that they didn't have in the first place. Lenders create all sorts of problems for students, just to enrich themselves and their partners.
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