32 Attorneys General Nationwide Urge U.S. Senate to Protect Students from Deceptive College Loan Practices

June 20, 2007: (Baton Rouge, La.) -- Louisiana Attorney General Charles C. Foti, Jr., joined by 31 Attorneys General, urged the U.S. Senate to enact The Student Loan Sunshine Act, a new federal law to safeguard students and families nationwide from deceptive practices in the college loan industry. The House of Representatives recently passed this legislation in a virtually unanimous vote of 414-3.

In a bipartisan letter to U.S. Senate Majority Leader, Senator Harry Reid, and Senate Minority leader Mitch McConnell, Edward M. Kennedy, Chairman of the Senate Education Committee and Senator Michael B. Enzi, the ranking member of the Committee; the Attorneys General requested the Senate to pass The Student Loan Sunshine Act without delay. Starting tomorrow, the Senate Education Committee will begin considering the Higher Education Amendments of 2007, during which the Sunshine Act is expected to be offered.

Similar legislation was recently enacted in New York to ban the deceptive practices exposed as a result of Attorney General Andrew M. Cuomo's ongoing investigation into the widespread conflicts of interest throughout the $85 billion-per-year student loan industry.

"Hopefully, by compelling lenders to fully disclose terms and conditions for all loans, this practice will cease," stated Attorney General Foti. "My hope is it will lead to better protection for our students and our consumers," Attorney General Foti added.

The new federal law will require every school that participates in the Title IV program or has students obtaining private educational loans to adopt a Code of Conduct. Additionally, the law will:

* Restore trust in schools by banning gifts from lenders, participation in advisory boards of lenders, revenue sharing between schools and lenders, and staffing of school financial aid offices by lenders.
* Require that "Preferred Lender Lists" be created only with the student's best interest in mind.
* Ensure access to the student's lender of choice, whether or not the lender is on a Preferred Lender List.
* Guarantee oversight of lenders offering private loans. Requires that schools disclose federal loan options before students take out private loans.
* Compel lenders and institutions to fully disclose terms, conditions and incentives (e.g., philanthropic contributions) for all loans.

"Many of us have served in both Federal and State Government, and we respect the role of each. We are well aware of the power and responsibility of the Federal Government to resolve national issues with uniformity and consistency. This problem cries out for a federal solution that supplements the work of state Attorney General offices across the country," said the Attorneys General in the multi-state letter.

The Attorneys General from the following states have signed on to the letter: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Iowa, Illinois, Hawaii, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington, West Virginia and Wyoming.

Nationwide, two-thirds of all college graduates leave school with student loans, and the college loan industry has become an $85 billion per year business.

Source: Louisiana Attorney General

Bookmark/Search this post with:

 •    •    •    •    •    •    •    •    •    •    •    •