March 3, 2008

Cuomo now looking into college/credit card agreements

Posted in Legislation Affecting Students, Student Loan News at 2:39 PM by Joe From Boston


NY Attorney General is now looking into other aspects of college deals, especially those with credit card providers.  Here’s an excerpt from the Chronicle of Higher Education’s article:

Cuomo’s Latest Targets Include Universities’ Deals With Credit-Card Providers
By PAUL BASKEN

During the past few months, New York State’s attorney general, Andrew M. Cuomo, has been drawing headlines for investigations involving insurance companies, home-appraisal services, and Internet-service providers.

But he hasn’t forgotten about colleges.

The attorney general, whose name last year became synonymous with the increased pressure on colleges to eliminate conflicts of interest in their student-lending practices, sent out a series of subpoenas this month asking institutions for details on their college-branded credit cards. Dartmouth College received a subpoena dated February 14, said Ellen L. Arnold, an associate general counsel at Dartmouth. “There are a number of other institutions who received the same subpoena on the same time frame,” Ms. Arnold said.

Agreements with credit-card providers, however, appear to be only a portion of what Mr. Cuomo is now exploring. A deputy counsel to the attorney general, Benjamin M. Lawsky, this week outlined widereaching plans to broaden the office’s investigations into conflicts of interest in the arrangements between colleges and companies that do business with the institutions or their students and alumni. The new investigative work will involve banking, health-insurance, textbook, food-service, and creditcard companies that have business relationships with hundreds of American colleges, Mr. Lawsky told a gathering of educators and guidance counselors from school districts on New York’s Long Island on Wednesday, Newsday reported.

The attorney general’s investigations so far have shown that “college campuses were becoming a place where big business was realizing it could basically pay its way to get to a captive audience,” Mr. Lawsky later told the newspaper. “They’re paying schools millions of dollars a year to make sure the students are indebted to them.”

One of the practices taking place at colleges that have attracted Mr. Cuomo’s attention involves a type of credit cards, known as affinity cards, that bear the logos of colleges, charities, or other organizations. One industry study estimated that by the end of 2006, consumers carried more than 320-million cobranded and affinity credit cards and used them for $849-billion worth of transactions.

Such credit-card partnerships are common with either colleges or their alumni associations. Mr. Cuomo and other critics have questioned whether such arrangements will encourage students to take on more debt than necessary, or encourage colleges to recommend lenders on the basis of financial relationships that aren’t in their students’ best interests.

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4 Comments »

  1. Victoria said,

    College students leave college with enough debt just in student loans. Colleges should not entice students to rack up more debt by offering them credit cards. They are making it too easy for these kids to get credit which if they are not responsible could leave their futures in trouble.

  2. Luckystreet said,

    Good write dude.. this is nice to visiting your blog!! i’ll back

  3. […] PT just wrote an article aboutHere’s a preview of it: […]


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