Attorney General Andrew Cuomo to investigate student loan scandal
Earlier, we told you about the student loan scandal involving the company Student Loan Xpress and officials at several universities (including the chancellor of the SUNY system) who have positions with the company or own stock in the company. In some cases, it has been alleged that university officials have used their influence to steer students towars using Student Loan Xpress for their student loans; in others, officials seem to have profited from skyrocketing stock values for Student Loan Xpress’s parent company, the CIT group.
It looks like State Attorney General Andrew Cuomo is about to get involved:
It was a call from an industry whistleblower that first drew New York Attorney General Andrew Cuomo’s attention to dubious practices in the student loan business.
While various authorities have been examining the issue for about a year, Cuomo became interested after a lender trying to break into the business told him that a few loan companies dominated the lucrative market. Cuomo, who would not name the whistleblower, saw it as an antitrust issue and started asking questions.
“For me it became real when I talked to lenders who couldn’t get into the market,” Cuomo told The Associated Press Tuesday. “You can be a lender who wants to compete and have a better product, but you just can’t get to the students. … The schools are controlling the access to the students.”
Stay tuned….
(h/t Albany Project)
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This is from the A.G.’s website:
Experience demonstrates that when competition is restricted, prices are likely to increase and quality is likely to suffer. If a business does not have competition, it has little incentive to improve its quality, lower its prices, or become more efficient. If there is only one seller in the market it may charge higher prices without fearing competition.
As I read it, I couldn’t help thinking about presidential campaigns. The system of ad-buys allows the rich few to gain unfair advantage, thus keeping out would-be but less well-funded candidates. Could it be argued that the current campaign system is an anti-trust issue?
Speaking as someone going to college in just a few months, I feel really lucky Democrats are looking out for me. First congress lowering rates on student loans (which isn’t really that big a deal, since Stafford loans only go up to what? $ 3000 a year? That’s not much out of a tuition+room/board easily higher than $40,000 a year.), and now A.C. is watching my back in terms of private loans. Nice.
Good work, Cuomo. I wasn’t sure what to make of him as AG, but it looks like he’s taking his job seriously and trying to make a difference.
Gee, I wonder how Pirro would be doing right now as AG?
I met Cuomo in January and he is very passionate about his job. I was skeptical before meeting him but he wowed me. I gave him some hard hitting questions too. I like his verve.