| You have probably seen news stories about the | | | | recommends. That would be fine except this |
| preferred lender lists that most colleges have and | | | | investigation has shown the names on that list may not |
| alleged misconduct by some lenders and financial aid | | | | all be there because they are the best option for the |
| officers. There have been a lot of accusations and | | | | student. A few financial aid officers and schools have |
| some admissions, but what does this all mean to you? | | | | received financial benefits from a few lenders (called |
| What if your school is one of the ones being | | | | inducements) for encouraging their students to use |
| investigated? | | | | them. As an example some lenders have allegedly |
| The majority of people who work in the financial aid | | | | contributed to the school’s scholarship funds, paid |
| office of your school are on your side and work very | | | | for officers to travel to island resorts for |
| hard to make sure their students receive the best loan | | | | “meetings”, given officers high paying |
| information possible. But just like any other industry, | | | | consultation jobs, provided gifts and cash bonuses to |
| there will always be a couple bad apples. So far 6 | | | | officers, paid a percentage of the loans generated |
| colleges have suspended or fired their financial aid | | | | back to the school, given officers stock in the |
| directors over inappropriate relationships with lenders. | | | | lender’s company. There is currently a |
| Several lenders have agreed to pay into a fund set up | | | | congressional summit going on to discuss these lender |
| to educate students and their families about their | | | | inducements, preferred lender lists, and any other |
| financial aid options, some of them up to two million | | | | issues left unresolved from the last summit. |
| dollars. Financial aid officers from more than 100 | | | | There has already been a profound effect within the |
| schools have been questioned. The general manager | | | | higher educational community. Many schools have |
| of the Department of Education’s financial partners | | | | voluntarily ended lender agreements that could be |
| services has been suspended. What exactly is all the | | | | seen as biased, adopted the new guidelines for |
| fuss over? | | | | conduct drafted by New York Attorney General |
| Almost all colleges and universities have a preferred | | | | Andrew Cuomo and repaid any money received from |
| lender list available for their students. The purpose of | | | | lenders to their students through scholarships and |
| the list was to give students several options of | | | | student benefits programs. The NY Attorney |
| companies that the college has found to be fair and | | | | General’s office has announced one intended |
| honest in their dealings. Even though you are not | | | | lawsuit already and several other states Attorneys |
| required to choose a lender off of the list - federal law | | | | General have started their own investigations. No one |
| states you may use any lender you wish - most | | | | is sure what this will mean to individual students, but the |
| students just picked one of the ones their school | | | | times are definitely changing. |