School loan probe costs dean his job

Attorney General Andrew M. Cuomo’s school-loan investigation cost a Columbia University dean his job as the prestigious college agreed to give $1.1 million to a fund that would educate students about student loans.
The agreement, on Friday, June 1, came after the probe uncovered that Columbia’s associate dean of student affairs, David Charlow, put the loan company Student Loan Xpress Inc. on Columbia’s preferred list soon after obtaining stock in its parent company, Education Lending Group.
Charlow was placed on paid leave last April, and dismissed by the school last week. The university claims that while Charlow violated the conflict of interest policy, no students were negatively affected.
Columbia has also agreed to send Cuomo annual reports on its financial aid office, making it the first college or university involved in the probe to agree to such conditions. Columbia University and the National Association of Student Financial Aid Administrators will be monitored by Cuomo’s office for the next five years.
Prompted by Cuomo’s probe into the illegal practices of the billion-dollar student loan industry and the colleges that supported it, on Wednesday, May 30, Governor Eliot Spitzer signed landmark legislation to help fight student loan industry abuse, which affects millions of working and middle class families struggling to afford college across the country.
The Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007, the first of its kind in the country, will address problems uncovered by Cuomo’s inquiry into student loan providers which began in 2006, and will protect students and their families from abuses and conflicts of interest in the $85 billion-per-year student loan industry.
The investigation has resulted in agreements with the country’s five largest student-loan providers: Citibank, Sallie Mae, JP Morgan Chase, Wells Fargo and Bank of America. Over 29 colleges have also accepted the College Loan Code of Conduct; a code established by Cuomo that would that prohibit practices like lender gifts to financial aid officers.
Among the six schools promising to reimburse students is St. John’s University who has agreed to pay about $80,553 to students for loans issued over a one-year period.
The SLATE Act will prohibit lenders from making gifts or sharing revenue with colleges and universities or their employees and ban colleges and universities from soliciting, accepting or receiving any gifts whatsoever.
It will also prohibit any college and university employees from receiving any advantage or reimbursement from the lender’s advisory board, and outlaws lender employees and agents from posing as college or university employees and quid-pro-quo high-risk loans that prejudice other borrowers or potential borrowers. The Act also sets forth strict criteria for schools to follow if they use “preferred lender” practices.
Governor Spitzer commented that the “legislation provides important protections to New York students and their families, too many of whom have been taken advantage of and cheated while in pursuit of quality higher education.”
The U.S. House of Representatives recently passed similar legislation, called the Student Loan Sunshine Act, in order to “clean up the student loan industry and ensure that students and families will encounter a more trust-worthy student aide system,” and the College Loan Code of Conduct has been endorsed by many in Congress as a national model.
Cuomo added that the next step “is for the U.S. Senate to take action, and send more national legislation to the president’s desk as soon as possible.”
The Federal Trade Commission has begun a review of complaints against student-loan lenders, to assess whether they have violated abuse and consumer fraud laws and deceived customers.