New York Attorney General Andrew Cuomo said on Thursday that companies specialising in student loans paid kickbacks to universities and their employees for steering business to them.
Lenders paid for trips for university officials, provided computer systems, and put school representatives on their boards to curry favour, Cuomo said at a press conference. Investigations are continuing and lawsuits against lenders and schools remain an option, he said. His office has not yet announced any legal action.
Last month Cuomo, who succeeded Eliot Spitzer as attorney general on January 1, said his office had expanded a probe of whether lenders use payments and perks to encourage colleges to steer student borrowers their way. Spitzer began a preliminary inquiry in November, requesting information from student lenders Nelnet Inc, Education Finance Partners, Educap and Sallie Mae, the nation's largest provider of student loans.
Cuomo expanded the probe by sending letters to more than 60 US educational institutions, requesting records that detail how they develop their lists of preferred lenders. The attorney general also sent requests to two more lenders: The College Board and CIT Group.