A Few Links Worthy Of Investigation Concerning Student Loans
Date: Sun, 05/13/2007 - 04:58
I hope you find these resources informative and helpful before you take out that next college loan.
[quote]Sallie Mae being sold for $25B!!
The &25Billion-$60 a share-offer includes $16.5 billion in debt and &8.5 billion in equity, according to CreditSights, a research firm. Private investment firms J.C. Flowers and Friedman Fleischer & Lowe would own 50.2% of Sallie mae. Bank of America and JPMorgan Chase would each own 24.9%.
Even though Sallie Mae says the deal won't affect those who already have the company's loans, consumer advocates say they fear the deal would reduce the information available to the public once Sallie mae becomes a private entity.
"That's one of the concerning pieces"says Luke Swarthout of the U.S. Public Interest Research Group.
http://campusprogress.org/speakers/1096/speakers-luke-swarthout.
Sallie Mae agreed to a settlement that calls for it to stop compensating financial aid officers who serve on its advisory board. Sallie Mae will also stop running university call centers at which its staffers often identify themselves as part of a university, rather than as Sallie Mae employees.
For complete story and more details
http://search.usatoday.com/search/search.aspx?qt=news%2Cyss%2Cweb%2Cre l%2Cimg%2Ctop10%2Ckmatch&nr=5&s=sb&kw=Sallie+Mae+being+sold&goBtn2.x=1 2&goBtn2.y=12
The private student loan market has grown more than twelve-fold over the last decade and some of these private loans have interest rates as high as 19 percent. That's far more than any student should have to pay for their education. These lenders have been making money hand over fist. Thanks to excessive federal subsidies, the stock prices of major student loan providers have soared. The stock of Sallie Mae, the largest student loan company, had jumped from $3 a share to more than $40. Just this week, a group of investors announced plans to buy Sallie Mae for $25 billion, and its stock price rose to $55.05.
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken- student_b_46155.html
ONGOING PROBE
Cuomo told reporters his investigation continues into other schools and lenders, including CIT Group's Student Loan Xpress. SLM, the first to reach a settlement with New York, has agreed to cooperate with the ongoing probe.
"To the schools and lenders, you now have a choice: you can either settle with us or the investigation will continue," Cuomo said at a Manhattan press conference.
"The real fraud they will find is the herding of middle- and lower-income kids into all kinds of degree schools, and they come out with $40,000 to $50,000 in loans," said Chanos. "We've only just scratched the surface."
http://www.reuters.com/article/businessNews/idUSN1124543620070411?feed Type=RSS&pageNumber=2
http://www.usatoday.com/news/education/2007-05-03-cuomo-student-loans_N.htm
In recent weeks news reports have documented a range of unethical abuses by student loan companies to gain unfair advantage in marketing their loans to students. I've introduced a bill called the "Student Loan Sunshine Act" to require full disclosure of any and all agreements between lenders and colleges and universities. Lenders would be required to report the terms of their special arrangements with colleges, and they'd be prohibited from offering lavish gifts to financial aid directors and other college employees. The lenders would also have to clearly state the terms and conditions of the loans they offer to students.
For complete Story
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken- student_b_46155.html
- Lender Gifts
* Lenders who participate in the government's Federal Family Education Loan (FFEL) program also engage in questionable tactics, like offering "educational conferences" at luxury hotels, and offering college officials free entertainment and tickets to sporting events. Many lenders offer their staff to work in financial aid offices during peak loan processing times, print materials for financial aid offices - and even e-mail students on behalf of the financial aid office.
- Preferred Lender Lists
* Most colleges maintain "preferred lender" lists and encourage students to borrow from the list. While some colleges use a rigorous process to ensure that these preferred lenders offer the best loan terms and conditions to students, others don't - and many preferred lender lists don't clearly state why the lenders has earned "preferred" status. Some preferred lender lists don't offer a real choice of lenders at all - because all the names on the list are subsidiaries of the same big lender.
Student Loan Sunshine Act
What are the dark rituals of this "unholy alliance"? When you're accepted to school and apply for loans, your financial aid office is likely to steer you to its "preferred lenders." NYU, for example, advertises 14 private loans, including the "Citibank CitiAssist Loan for NYU Students" and the "Nellie Mae/Sallie Mae Signature Student Loan for NYU Students." Cuomo's office says 90 percent of student borrowers end up choosing from their school's list.
And lenders may pay kickbacks to schools in exchange for sending the business their way. These can include direct cash percentages on loans, all-expense-paid luxury trips for financial aid officers and their spouses, and setting up funds and credit lines for schools to profit from, to operating call centers for understaffed financial aid offices.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html
Mixed in with these scandals are revelations that dozens of universities have inked deals with various lenders to route a percentage of revenue from student loans back to the schools, with the funds often explicitly directed into financial-aid coffers. Congress and at least two states are looking into these inducements, which New York attorney general Andrew Cuomo calls "kickbacks"--a label that seems a tad unfair if the money helps cash-strapped students rather than enrich officials. But with the spotlight now on student loans, critics are clamoring to reform what has become an $85 billion industry.
The roots of today's intrigue date back to 1965, when Uncle Sam began guaranteeing loans to needy students and paying the interest while the borrowers were in college. Because the private sector was still leery of loaning money to kids with no credit history or collateral, the government sweetened the deal by promising lenders a specified interest rate regardless of what student borrowers pay. Add low default rates (due in part to such dire consequences as garnisheed wages and torpedoed credit ratings) as well as soaring tuitions, and--voilà!--lenders are fighting one another to dole out $17 billion in supplemental loans that aren't backed by the government.
The feds tried to cut out the middlemen in 1994 by letting students at participating schools borrow directly from the Treasury. But private lenders have held on to nearly 80% of the market by improving service and offering discounts for such things as on-time repayment. Knowing that many students choose the first entry on a school's list of "preferred lenders," lots of colleges have used these lists to get lower rates for more borrowers, and some lenders have tacked on revenue-sharing deals. "We believed it made good sense to use money that would otherwise go into Citibank's pockets to give more financial aid to N.Y.U. students," New York University spokesman John Beckman said in a statement. His school and five others agreed this month to swear off revenue sharing and repay students nearly $3.3 million.
Other industry tactics also need policing. "I have an invitation in my drawer here to go to the Caribbean for four or five days with my wife, all expenses paid, just to go listen to a student-loan lender," says Dan Davenport, financial-aid director at the University of Idaho, which remains dedicated to direct lending. "There's such big money at stake that people are willing to do many different things to get that piece of the pie."
http://www.time.com/time/magazine/article/0,9171,1609801,00.html
5. A Break for the Unluckiest
Besides the bills already introduced, more student aid reform ideas are likely to get consideration soon. One would involve amnesty for people who've seen defaulted loans double, triple, and quadruple with interest and penalties, growing to amounts too great to repay in this lifetime. Winning this broad relief is a top priority for activist Alan Collinge of Student Loan Justice, who spent this spring crisscrossing the country in an RV, meeting with two-thirds of the 60 legislators on the House and Senate education committees. "They have been very responsive and receptive," Collinge says.
A second area for reform: Getting rid of the bankruptcy exemption. People who run up huge credit card bills or lose their shirts on a business have at least a fighting chance of having those debts cleared through bankruptcy. That's not the case for student loans of any type. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act decreed private student loans can't be forgiven in bankruptcy. The same has been true of FFELP and Direct Loans since 1998. Student advocates would like to get rid of both rules and have the courts treat student loans like other consumer debt.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html
--------------------------------------------------------------------------------
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-6/1176697926 130470.xml&coll=1
http://www.collegejournal.com/aidadmissions/newstrends/20070416-hechin ger.html
http://www.msnbc.msn.com/id/17644168/
Federal Family Education Loan Program at the U.S. Education Department, held at least $100,000 in stock in a student loan company, Student Loan Xpress.
http://chronicle.com/daily/2007/04/2007040601n.htm
Ohio launches probe into student loan industry
http://news.yahoo.com/s/nm/20070413/bs_nm/financial_studentloans_dc
Area Colleges Scrutinizing Financial Aid Practices
By Valerie Strauss
Washington Post Staff Writer
Friday, April 13, 2007; Page B01
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/12/AR2007 041202337.html
Student Loans
When Student Lenders Compete, N.Y. Wins
Colleges and college aid officials have been funneling their students to big banks like Sallie Mae and Citibank in exchange for cash, gifts and in-kind benefits, according to a series of recent public investigations, the most energetic of which is being led by New York State Attorney General Andrew Cuomo.
Thus far, the investigations have resulted in the suspension of 10 higher education officials, including Columbia University's director of financial aid, the issuance of almost 100 subpoenas nationwide, and… more
http://www.newamerica.net/issues/keywords/student_loans[/quote]
I hope these resources help you be a better consumer when shopping for your student loans. And, please alwasy remeber to ask just who are on your potential University's preffered lending list and exactly how did they obtain that position. Remeber, when seeking money for higher education you are the consumer purchasing their product.
As I find more relevant information I will continue to post.
[quote]Sallie Mae being sold for $25B!!
The &25Billion-$60 a share-offer includes $16.5 billion in debt and &8.5 billion in equity, according to CreditSights, a research firm. Private investment firms J.C. Flowers and Friedman Fleischer & Lowe would own 50.2% of Sallie mae. Bank of America and JPMorgan Chase would each own 24.9%.
Even though Sallie Mae says the deal won't affect those who already have the company's loans, consumer advocates say they fear the deal would reduce the information available to the public once Sallie mae becomes a private entity.
"That's one of the concerning pieces"says Luke Swarthout of the U.S. Public Interest Research Group.
http://campusprogress.org/speakers/1096/speakers-luke-swarthout.
Sallie Mae agreed to a settlement that calls for it to stop compensating financial aid officers who serve on its advisory board. Sallie Mae will also stop running university call centers at which its staffers often identify themselves as part of a university, rather than as Sallie Mae employees.
For complete story and more details
http://search.usatoday.com/search/search.aspx?qt=news%2Cyss%2Cweb%2Cre l%2Cimg%2Ctop10%2Ckmatch&nr=5&s=sb&kw=Sallie+Mae+being+sold&goBtn2.x=1 2&goBtn2.y=12
The private student loan market has grown more than twelve-fold over the last decade and some of these private loans have interest rates as high as 19 percent. That's far more than any student should have to pay for their education. These lenders have been making money hand over fist. Thanks to excessive federal subsidies, the stock prices of major student loan providers have soared. The stock of Sallie Mae, the largest student loan company, had jumped from $3 a share to more than $40. Just this week, a group of investors announced plans to buy Sallie Mae for $25 billion, and its stock price rose to $55.05.
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken- student_b_46155.html
ONGOING PROBE
Cuomo told reporters his investigation continues into other schools and lenders, including CIT Group's Student Loan Xpress. SLM, the first to reach a settlement with New York, has agreed to cooperate with the ongoing probe.
"To the schools and lenders, you now have a choice: you can either settle with us or the investigation will continue," Cuomo said at a Manhattan press conference.
"The real fraud they will find is the herding of middle- and lower-income kids into all kinds of degree schools, and they come out with $40,000 to $50,000 in loans," said Chanos. "We've only just scratched the surface."
http://www.reuters.com/article/businessNews/idUSN1124543620070411?feed Type=RSS&pageNumber=2
http://www.usatoday.com/news/education/2007-05-03-cuomo-student-loans_N.htm
In recent weeks news reports have documented a range of unethical abuses by student loan companies to gain unfair advantage in marketing their loans to students. I've introduced a bill called the "Student Loan Sunshine Act" to require full disclosure of any and all agreements between lenders and colleges and universities. Lenders would be required to report the terms of their special arrangements with colleges, and they'd be prohibited from offering lavish gifts to financial aid directors and other college employees. The lenders would also have to clearly state the terms and conditions of the loans they offer to students.
For complete Story
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken- student_b_46155.html
- Lender Gifts
* Lenders who participate in the government's Federal Family Education Loan (FFEL) program also engage in questionable tactics, like offering "educational conferences" at luxury hotels, and offering college officials free entertainment and tickets to sporting events. Many lenders offer their staff to work in financial aid offices during peak loan processing times, print materials for financial aid offices - and even e-mail students on behalf of the financial aid office.
- Preferred Lender Lists
* Most colleges maintain "preferred lender" lists and encourage students to borrow from the list. While some colleges use a rigorous process to ensure that these preferred lenders offer the best loan terms and conditions to students, others don't - and many preferred lender lists don't clearly state why the lenders has earned "preferred" status. Some preferred lender lists don't offer a real choice of lenders at all - because all the names on the list are subsidiaries of the same big lender.
Student Loan Sunshine Act
What are the dark rituals of this "unholy alliance"? When you're accepted to school and apply for loans, your financial aid office is likely to steer you to its "preferred lenders." NYU, for example, advertises 14 private loans, including the "Citibank CitiAssist Loan for NYU Students" and the "Nellie Mae/Sallie Mae Signature Student Loan for NYU Students." Cuomo's office says 90 percent of student borrowers end up choosing from their school's list.
And lenders may pay kickbacks to schools in exchange for sending the business their way. These can include direct cash percentages on loans, all-expense-paid luxury trips for financial aid officers and their spouses, and setting up funds and credit lines for schools to profit from, to operating call centers for understaffed financial aid offices.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html
Mixed in with these scandals are revelations that dozens of universities have inked deals with various lenders to route a percentage of revenue from student loans back to the schools, with the funds often explicitly directed into financial-aid coffers. Congress and at least two states are looking into these inducements, which New York attorney general Andrew Cuomo calls "kickbacks"--a label that seems a tad unfair if the money helps cash-strapped students rather than enrich officials. But with the spotlight now on student loans, critics are clamoring to reform what has become an $85 billion industry.
The roots of today's intrigue date back to 1965, when Uncle Sam began guaranteeing loans to needy students and paying the interest while the borrowers were in college. Because the private sector was still leery of loaning money to kids with no credit history or collateral, the government sweetened the deal by promising lenders a specified interest rate regardless of what student borrowers pay. Add low default rates (due in part to such dire consequences as garnisheed wages and torpedoed credit ratings) as well as soaring tuitions, and--voilà!--lenders are fighting one another to dole out $17 billion in supplemental loans that aren't backed by the government.
The feds tried to cut out the middlemen in 1994 by letting students at participating schools borrow directly from the Treasury. But private lenders have held on to nearly 80% of the market by improving service and offering discounts for such things as on-time repayment. Knowing that many students choose the first entry on a school's list of "preferred lenders," lots of colleges have used these lists to get lower rates for more borrowers, and some lenders have tacked on revenue-sharing deals. "We believed it made good sense to use money that would otherwise go into Citibank's pockets to give more financial aid to N.Y.U. students," New York University spokesman John Beckman said in a statement. His school and five others agreed this month to swear off revenue sharing and repay students nearly $3.3 million.
Other industry tactics also need policing. "I have an invitation in my drawer here to go to the Caribbean for four or five days with my wife, all expenses paid, just to go listen to a student-loan lender," says Dan Davenport, financial-aid director at the University of Idaho, which remains dedicated to direct lending. "There's such big money at stake that people are willing to do many different things to get that piece of the pie."
http://www.time.com/time/magazine/article/0,9171,1609801,00.html
5. A Break for the Unluckiest
Besides the bills already introduced, more student aid reform ideas are likely to get consideration soon. One would involve amnesty for people who've seen defaulted loans double, triple, and quadruple with interest and penalties, growing to amounts too great to repay in this lifetime. Winning this broad relief is a top priority for activist Alan Collinge of Student Loan Justice, who spent this spring crisscrossing the country in an RV, meeting with two-thirds of the 60 legislators on the House and Senate education committees. "They have been very responsive and receptive," Collinge says.
A second area for reform: Getting rid of the bankruptcy exemption. People who run up huge credit card bills or lose their shirts on a business have at least a fighting chance of having those debts cleared through bankruptcy. That's not the case for student loans of any type. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act decreed private student loans can't be forgiven in bankruptcy. The same has been true of FFELP and Direct Loans since 1998. Student advocates would like to get rid of both rules and have the courts treat student loans like other consumer debt.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html
--------------------------------------------------------------------------------
http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-6/1176697926 130470.xml&coll=1
http://www.collegejournal.com/aidadmissions/newstrends/20070416-hechin ger.html
http://www.msnbc.msn.com/id/17644168/
Federal Family Education Loan Program at the U.S. Education Department, held at least $100,000 in stock in a student loan company, Student Loan Xpress.
http://chronicle.com/daily/2007/04/2007040601n.htm
Ohio launches probe into student loan industry
http://news.yahoo.com/s/nm/20070413/bs_nm/financial_studentloans_dc
Area Colleges Scrutinizing Financial Aid Practices
By Valerie Strauss
Washington Post Staff Writer
Friday, April 13, 2007; Page B01
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/12/AR2007 041202337.html
Student Loans
When Student Lenders Compete, N.Y. Wins
Colleges and college aid officials have been funneling their students to big banks like Sallie Mae and Citibank in exchange for cash, gifts and in-kind benefits, according to a series of recent public investigations, the most energetic of which is being led by New York State Attorney General Andrew Cuomo.
Thus far, the investigations have resulted in the suspension of 10 higher education officials, including Columbia University's director of financial aid, the issuance of almost 100 subpoenas nationwide, and… more
http://www.newamerica.net/issues/keywords/student_loans[/quote]
I hope these resources help you be a better consumer when shopping for your student loans. And, please alwasy remeber to ask just who are on your potential University's preffered lending list and exactly how did they obtain that position. Remeber, when seeking money for higher education you are the consumer purchasing their product.
As I find more relevant information I will continue to post.
Well if it does become a sticky I hope someone will correct my m
Well if it does become a sticky I hope someone will correct my mis-spell on always.....I am always typing too quickly.
