Columbia University has reached a settlement with New York State's attorney general over student loan practices that will require the school to pay $1.1 million into an educational fund and submit to monitoring of its financial aid procedures.
Columbia and the financial aid officers' national association also have agreed to abide by New York's code of conduct for lending practices, New York Attorney General Andrew Cuomo said Thursday.
Two more lenders have agreed to abide by a code of conduct designed to protect students. (April 25)
Separately, the Federal Trade Commission is looking into student loan company marketing tactics, according to a letter released Thursday by the chairman of the House education committee.
Loan sharks on campus
"We are actively assessing whether lenders are making deceptive claims," FTC Chairman Deborah Majoras said in the May 31 letter. "In addition, we are evaluating whether other laws that the FTC enforces are being violated."
Congressional and state officials have been examining the $85 billion student loan industry for months, with investigators alleging conflicts of interest and payment by lenders of kickbacks to curry favor with college officials.
New York has now struck agreements with at least 25 schools and five student loan companies as part of its investigation.
The FTC has formed an intra-agency working group focused on concerns about private student loans, according to the letter, which was addressed to committee Chairman George Miller, a California Democrat.
Under Columbia's settlement, the school will pay $1.1 million into a borrowers' education fund, and submit its financial aid procedures to monitoring by Cuomo's office.
"The agreement signed with the attorney general specifically states that Columbia University does not admit, and expressly denies, that it has violated any law in connection with its student loan practices," New York-based Columbia said in a statement.
Columbia also said it "has moved quickly on a number of reforms now contained in the agreement with the attorney general."
The National Association of Student Financial Aid Administrators (NASFAA) also agreed to abide by the code and to submit to five years of oversight measures, Cuomo said.
Columbia said last week that it had dismissed its director of financial aid, David Charlow, after regulatory filings showed he promoted a student loan company in which he had a financial stake.
Those filings showed that Charlow sold shares in Education Lending Group, the former parent of Student Loan Xpress, for a gain of more than $100,000. Student Loan Xpress is now a unit of CIT Group Inc. (up $1.00 to $60.93, Charts, Fortune 500)
At a news conference in Manhattan, announcing Thursday's settlement, Cuomo said his office's probe of the aid official was continuing.
"There is an ongoing investigation still with the individual at Columbia University," Cuomo said. "This individual is not part of this settlement."
Charlow's attorney, Harvey Kurzweil, declined to comment Thursday.
[Source College Savings Advice]
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