Attorney General probing schools' relationships with lenders - East Valley Tribune: News

Attorney General probing schools' relationships with lenders

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Posted: Wednesday, April 18, 2007 4:12 pm | Updated: 6:48 pm, Fri Oct 7, 2011.

Arizona Attorney General Terry Goddard wants to know if at least two companies that handle student loans in Arizona have broken the law.

Goddard announced Tuesday he would look at whether Arizona schools were offered or had accepted cash and other perks from the student lenders in exchange for business.

The names of the companies were not released, but Goddard said he intends to ask for comprehensive records detailing their work with public and private universities as well as community colleges.

“We have seen evidence in other states that these loans have improperly benefited lenders and schools at the expense of students,” Goddard said in a press release. “If similar abuses have taken place in Arizona, we will take action to stop them and hold accountable anyone who has acted outside the law.”

The investigation comes on the heels of a nationwide probe by New York Attorney General Andrew Cuomo that found dozens of schools across the country had accepted money or gifts from companies operating in the $85 billion industry.

In February, Cuomo started looking at student loan providers and the list of preferred lenders that colleges give to their students.

So far, his office is investigating more than 100 schools and six lenders for deceptive and illegal practices, according the New York Attorney General’s website.

Lenders have been accused of offering schools financial kick backs and other incentives such as gifts and trips in return for preferred lending status – which gives them an advantage over other competitors.

Goddard’s office took part in a conference call along with investigators from 40 other states looking into the matter, according to officials in Goddard’s office.

They talked strategies for investigating the case. But details of the conversation were not released.

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