17 March 2007 (via the NYSAGO):
Attorney General Andrew M. Cuomo today revealed deceptive practices that he has uncovered in his nationwide investigation into the college loan industry. In a letter sent to every college and university in New York state, and certain other schools across the country, Cuomo warned them to end or fully disclose potential conflicts of interest in their relationships with private lenders. He also cautioned students and their families to protect themselves against these practices.
Industry practices revealed include: Establishment of so-called “preferred lender” lists without disclosing the basis for selection or the specific benefits associated with these preferred lenders; revenue sharing and other financial arrangements between schools and lenders; denials or impediments to a student or parent’s choice of lender based on the borrower’s selection of a particular lender or guaranty agency; impediments to competition in the lending industry that stifle better loan terms for students and parents.
10 April 2008 (via The Washington Post):
Nearly 50 student lenders, including some of the industry’s biggest names, have stopped issuing federally guaranteed loans in recent weeks because of paralysis in the credit markets, confronting students with higher borrowing costs just as they are starting to apply for financial assistance for the coming school year.
Dear me, whatever could have brought this on?
These companies represented 12 percent of the market before they left, and analysts say this is just the beginning of an exodus. That is because virtually all student lenders have been shut out of their traditional funding sources on the debt markets. Dozens of other lenders that offer private loans, which have no federal backing, have also dropped out.
Sure. Would anyone like to buy a bridge? No? Then listen to this man:
“The congressional action and the media coverage on this issue is doing a massive disservice to students and families, many of whom are concerned about paying for college already,” said Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group. “We know many of them are adverse to debt, and for lenders to be sending out a message of crisis in order to secure themselves a bailout potentially could dissuade families from seeking available financing options.”
Yeah. If we could find a way to not chuck another few million at large corporations that would be just dandy. Maybe colleges could lower their tuitions or something so people don’t start their adult lives with huge amounts of debt.
Hmmm. There seems to be a large angry mob of college administrators outside. I wonder what they want?