N.Y. Attorney General Broadens Student Loan Probe
STEVE INSKEEP, host:
Here's an investigation that may involve Wall Street. New York Attorney General Andrew Cuomo says he's expanding his investigation into the student loan business. He says he's looking into whether direct marketers use deceptive tactics to persuade students to take out loans.
NPR's Jim Zarroli reports.
JIM ZARROLI: Cuomo's office said it had sent subpoenas to 28 direct marketers that act as middlemen between students and lenders. Cuomo says direct marketers try to sell loans to student and they are increasingly pitching their products directly to them.
He says they're using inducements like fake checks, gift cards, and sweepstakes to try to get business, in violation of state and federal law. One company called American Student Loan Services sent letters to student that looked as though they had come from the federal government. The letters came from something called the Federal Student Loan Department and they were stamped with an eagle insignia.
The company didn't return a phone call yesterday seeking a response. Cuomo said the last thing students need are, quote, "sharks baiting them with glossy promotions and deceptive offers." Cuomo's office said it had also issued document requests to five banks, including Wachovia, Wells Fargo and Bank of America.
Cuomo's office has been investigating the $85 billion student loan industry for months. More than two dozen colleges and 12 lenders have agreed to change their lending practices as a result of the investigation.
Jim Zarroli, NPR News, New York.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.