ALBANY, N.Y. (AP) – New York Attorney General Andrew Cuomo intends to sue Drexel University in his investigation of student loan arrangements that resulted in more settlements Thursday from colleges in Rhode Island and New York.
The Drexel action would be his first lawsuit against a college or university in the investigation, although he has settled with Fordham University, St. John’s University, and Long Island University in negotiations that avoided court action.
Cuomo said Thursday that Drexel received more than $124,000 from the lender Education Finance Partners and was in line to receive $126,000 more after the Philadelphia college made EFP its “sole preferred private loan provider.” Since 2005, EFP has gotten more than $16 million in loan volume from Drexel, Cuomo said.
Cuomo announced settlements with Salve Regina University in Rhode Island, Pace University, the New York Institute of Technology and Molloy College on Long Island. Salve Regina and Molloy College both had revenue sharing agreements with EFP, a lender that settled with Cuomo recently.
The colleges didn’t immediately respond to requests for comment.
It’s the latest action by Cuomo and other states’ attorneys general in the growing investigation of colleges that have accepted payments and gifts from lenders in exchange for placing the lenders on preferred lists presented to students and their families.
Although the federal government sets maximum student loan interest rates, preferred lender lists based on benefits to the college could eliminate competitors who might offer better terms.
“This investigation is a two front battle: lenders and schools,” Cuomo said.
“We have proceeded against lenders and now we are proceeding against schools. There is no reason for a school not to adopt the Code of Conduct,” Cuomo said, referring to a code his office devised for dealings between lenders and schools. “This office has been clear to schools: settle or we will commence litigation. Either way we will get justice for students.”
Salve Regina University received over $7,800 in 2005-06 to put EFP on its list of preferred lenders, Cuomo said. Cuomo said the school will agree to his code of conduct, designed to avoid such arrangements and reimburse students $7,839.
Pace University hired the staff of the major lender SLM Corp., commonly known as Sallie Mae, who identified themselves as Pace University employees, Cuomo said.
New York Institute of Technology accepted payment from lenders, some of which was for meals and trips and conferences, in exchange for getting on a preferred lender list.
Molloy College had a revenue sharing agreement with EFP worth more than $1,600 to the college.
California and Texas officials took steps in their investigations this week as part of review of the $85 billion student loan industry, which was pressed by Cuomo after it began with inquiries under former Attorney General Eliot Spitzer. Several lenders and colleges and universities have already settled lawsuits and adopted Cuomo’s reforms, which are now part of a bill that could become the first state law on the issue in the nation.
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