April 4, 2007
New York Attorney General May Sue ASU
As many of you may have already heard the student loan industry is getting a lot of bad press. I just recently read this article about partnerships that lenders are setting up with schools that can end up very misleading to the students.
The article is about New York Attorney General Andrew Cuoma considering a lawsuit against Arizona State University due to an agreement they have with Education Finance Partners. ASU apparently has a partnership with Education Finance Partners. This agreement lists Education Finance Partners as the preferred lender for the school and allows them to utilize the school logo on promotional material in exchange for a cut of the profit.
Click here for the full article or read below…
NY AG says He May Sue ASU over Student Loan Deal
April 3rd, 2007 @ 8:13am
by Associated Press
A deal between Arizona State University and a private lender to share revenue from student loans has drawn the attention of New York Attorney General Andrew Cuomo, who threatened a lawsuit if they don’t stop the practice.
ASU’s agreement with San Francisco-based Education Finance Partners calls for the university to identify the firm to students as a preferred lender for private student loans, even allowing it to use the ASU logo on promotional materials. In exchange, the school gets a cut of the profits.
Cuomo is investigating the deal between the company and dozens of universities across the nation. Last week, the attorney general sent settlement offers calling on the schools to halt such deals to avoid litigation.
ASU’s legal office is reviewing Cuomo’s letter and considering how to respond, according to a statement released by the university.
“ASU welcomes the opportunity to review and improve our student loan practices in the best interest of our students,” the ASU statement said.
The terms proposed by Cuomo include a ban on schools receiving anything of value from lenders and rules on making up preferred provider lists that only consider students’ interests. Lenders would be barred from identifying themselves as university employees and won’t be allowed to work in school financial aid offices.
New York is trying to protect its state’s students when they attend schools outside the state, a Cuomo spokesman said.
“The attorney general represents New York’s students,” spokesman Matthew Glazer said. “So if the state’s students are affected, it’s our concern.”
Private loans are a booming business at ASU and many other public universities because of higher costs and caps on federal student loan amounts. Private borrowing at ASU grew from $3.8 million in 2000 to $23 million last year.
ASU finance records show the university has received $5,887 from Education Finance Partners for students’ $3.3 million in private loans.
The deal between ASU and Education Finance Partners was first reported by the East Valley Tribune newspaper in December.
Tamera Briones, the lender’s chief executive officer, has defended the practice as a legitimate way to invest in the higher education community.
“The price to the borrower does not change. So this whole idea or notion that what we do impacts actual borrowers or families is wrong,” Briones said in December.
Education Finance Partners issued a statement Monday saying it is working with Cuomo’s office to settle the inquiry.