Student Loans – Nationwide Investigation

Attorneys General in Florida and New York are investigating conflicts of interest and deceptive practices in the student loan industry. That grew into a probe by the New York AG to look into the cozy relationships between credit card companies, universities and university-affiliated fundraising groups.

The credit card investigation focuses on the marketing of cards with school logos and mascots to undergraduates through contracts between universities and banks that issue the cards, according to two officials at two schools that received subpoenas this spring.

Mark Nickel, a spokesman for Brown University, said the subpoenas demanded documents showing fees paid the university as well as details of how the cards were marketed to undergraduates and alumni. Dartmouth College said in a written statement the subpoenas sought “information about its affinity credit card arrangement.’

Attorneys General in both states refused to discuss their ongoing investigations. New York declined to name the schools that have been subpoenaed.

Officials in both Florida and New York, however, asked the CWN for copies of the contract between the Seminole Boosters, FSU and the Bank of America after being asked to comment about the deal with Florida State.

As the investigations continue, Congress is holding hearings on credit card marketing tactics on college campuses. Rep. Carolyn B. Maloney, (D-NY), already has called for a Credit Cardholders Bill of Rights to crack down on deceptive practices. At a June 26 hearing, Maloney said Congress should consider regulating credit card marketing tactics on college campuses.

Benjamin Lawsky, Deputy Counselor to New York Attorney General Andrew M. Cuomo, testified that several of the nation’s largest public universities as well as a number of prominent private schools have entered confidential, exclusive agreements with credit card issuers.

“These contracts can be extremely lucrative, leading to payments of millions of dollars at some colleges and universities,” Lawsky said in his written testimony. These arrangements include several of the nation’s largest public and private universities, he testified.

These college business relationships “foster the generally false impression that the college or university evaluated the terms of the cards offered and determined that the co-branded credit cards offer the best, or among the best, rates and terms for the college or university’s students.”

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