In testimony before the Senate Banking Committee last month, New York Attorney General Andrew Cuomo noted that the federal government fails to police the private student loan marketplace. Scandal A long-simmering controversy finally boils over in the student loan industry. Seeds of By Tim Goral T O HEAR THE REACTION OF SOME PUN dits to the controversy swirling around the student loan industry, the most surprising thing about it is that it has taken so long to surface. We should be clear up front that the actions of a few individuals do not and should not sully the reputations of the thousands of dedicated financial aid professionals throughout the country. But we should be equally clear that parts of the student loan industry have become entangled in some practices that are both unethical and illegal. With the relatively low borrowing limits on federally guaranteed loans, many students and their families are increasingly turn- ing to private lenders to finance their education. Student loan requests have increased an average of 27 percent in each of the last six years, while students struggle to pay tuition and often graduate with enormous debt. “With the student loan issue, the federal government has hit students and their families with a real one-two punch,” said New York Attorney General Andrew Cuomo in testimony before the Senate Banking Committee last month. “First, federal student aid has not even come close to keeping pace with rising costs of attending college, essentially forcing students and families to enter the costly private loan market. Second, the federal government fails July 2007 | 47 universitybusiness.com
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Table of Contents for the Digital Edition of University Business - July 2007