The Federal Government is looking to pass legislation to protect students from deceptive college loan practices. Did you get bad advice on a student loan lender? We may be able to help. Contact our South Florida Student Loan Scam attorneys today! Toll Free: 866-495-8060
Frequently Asked Questions - Student Loan Scandal:
- What exactly is the Student Loan Scandal?
- What are the areas of concern?
- How many schools are affected?
- How serious is this?
- If I am found to be a victim of a student loan scam, can I get my money back?
- What can I do?
What exactly is the Student Loan Scandal?
Over the last six months, dozens of colleges and universities across the United States have come under investigation for recommending specific lending institutions to students looking for financial aid. In many cases, it has been found that these schools have relationships with the financial institutions, in which the school or individuals within the school are profiting from the relationships via incentives, kickbacks, and bribes.
The New York State District Attorney initially took the lead in this investigation, reviewing practices at specific colleges and universities; however, this investigation is now more widespread.
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What are the areas of concern?
There are several areas for concern. The goals of a college or university should be to best represent its students' interests by providing students with information on institutions that are providing competitive loans, rather than recommending institutions because of beneficial relationship for the school. With this said, there are several disturbing trends that have been found in the initial investigations:
- Financial ties between lenders and schools where the schools benefit from recommending a specific lender.
- Payments from lenders to the schools in exchange for "preferred lender" status.
- Gifts and trips to school officers by lenders.
- Payments to school officials in exchange for serving on a lender's advisory boards.
- Lender call center employees misrepresenting themselves as an employee of the college or university.
- Non-disclosure of a lenders full array of interest rates offered as well as their default rate.
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How many schools are affected?
To date, there have been over 100 colleges and universities subpoenaed in various student loan investigations.
It is a telling sign however, that, according to the Department of Education, at some 300 campuses nationwide, there is one lender who may control an astounding 99% of all student loans.
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As an example, the financial aid directors at Johns Hopkins and Columbia universities have been forced out of their posts amid evidence that they received payments or gifts from loan companies they recommended to students.
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If I am found to be a victim of a student loan scam, can I get my money back?
Obviously, this question doesn't have an easy answer. So far, at least six schools including the University of Pennsylvania, New York University, Syracuse University, Fordham University, Long Island University and St. John's University - have agreed to reimburse students a total of $3.27 million for inflated loan prices caused by revenue sharing agreements.
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Contact the attorneys at FREIDIN · DOBRINSKY. We are currently reviewing these student loan scandal cases, and will provide free, no obligation consultation to help you determine if you were affected and have any recourse.
You can contact us via email, or by calling 1.866.495.8060.
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News Coverage:
USA TODAY: 29 Lenders Subpoenaed in Scrutiny of Student Loans
New York Attorney General Questions Marketing.
Sun-Sentinel: UCF, USF Among Those Subpoenaed as New York's Cuomo Probes Division 1 Colleges
New York Attorney General Andrew Cuomo is now investigating whether college athletic departments nationwide -- including those at UCF, USF and Florida Atlantic -- steered athletes and other students to education lenders in exchange for kickbacks.
Sun-Sentinel: Student-Loan Inquiry Now Includes Athletic Departments; FAU On List
New York Attorney General Andrew Cuomo is now investigating whether top college athletic departments nationwide - including those at UCLA, Georgetown University, Auburn University and three Florida schools - steered athletes and other students to education lenders in exchange for kickbacks.
Florida Attorney General News Release
Attorneys General McCollum and Cuomo Urge U.S. Senate to Protect Students from Deceptive College Loan Practices. 32 Attorneys General join bipartisan effort to enact new Federal law without delay.
TODAY Show:
Consumer contributor Janice Lieberman tell’s TODAY’s Matt Lauer about this financial issue and what to ask college loan advisors:
- How does the school select preferred lenders?
- Does the school receive payments, benefits, or perks?
- Is it a fixed rate?
- What happens if the loan is sold to another lender
MSNBC: Student Financial Aid Scandal Grows
On a Manhattan cruise ship, a major New York bank spent $74,000 wining and dining student-loan officials from more than 200 colleges.
MSNBC: Cuomo Charges ‘Redlining’ in Student Loan Probe
Some student loan providers have been setting rates based on the schools borrowers attend, a practice New York Attorney General Andrew Cuomo likens to “redlining” in the home mortgage market.
CNN Money: Student Loan Scandal: Effects on Consolidation
It's a good thing you got that college education. You can put it to good use navigating the complex maze that is the student loan industry as you consider whether to consolidate your federal student loans.
NPR: “Marketplace” Report: Student Loan Scandal
College financial aid officers have agreed to crack down on lender kickbacks and submit to monitoring by the New York attorney general's office.
Sun-Sentinel: Colleges Respond to Injury About Student Loan Firms
Amid state and federal investigations, South Florida colleges and universities are enacting tighter controls over their relationships with companies that lend money to students.
Sun-Sentinel: FAU to Cut Ties With Student Loan Companies That Offered Incentives
Florida Atlantic University will no longer do business with two companies that promised the school money for all alumni who agreed to consolidate their student loans.
Palm Beach Post: State Probes Student Loans
Nova Southeastern University, the largest private college in Florida, has a revenue-sharing agreement with one of its preferred student loan providers and contracts with the company to staff its student call center, according to the state.
