Colleges settle, but others face suits
ALBANY, N.Y. — New York Attorney General Andrew Cuomo intends to sue Drexel University in his investigation of student loan arrangements that resulted in more settlements Thursday with colleges in Rhode Island and New York.
The Drexel action would be his first lawsuit against a college or university in the investigation, although he has settled with Fordham University, St. John’s University and Long Island University in negotiations that avoided court action.
Cuomo said Thursday that Drexel received more than $124,000 from the lender Education Finance Partners and was in line to receive $126,000 more after the Philadelphia college made EFP its “sole preferred private loan provider.” Since 2005, EFP has gotten more than $16 million in loan volume from Drexel, Cuomo said.
In Washington, Sen. Edward M. Kennedy, D-Mass., asked the U.S. Education Department to investigate two lenders — Federal Family Education Loan Processing Corp. and FSLS Inc. — that offer inducements to students that might violate federal law. Kennedy said one company offers a credit card with $300 credit for a “testimonial resulting from our federal student loan services.”
Kennedy said Federal Family also markets itself as FFELP Inc. and may mislead consumers into believing it is part of the government because it notes it was created under the 1965 Higher Education Act.
Federal Family and the Education Department didn’t immediately respond to requests for comment. Efforts to reach an official for FSLS Inc. were unsuccessful.
Cuomo announced settlements with Salve Regina University in Newport, R.I., Pace University, the New York Institute of Technology and Molloy College on Long Island. The attorney general said Salve Regina and Molloy College both had revenue sharing agreements with EFP, a lender that settled with Cuomo recently.
Molloy College, however, denied that it settled any case against it and said it didn’t take money from EFP or place the lender on its preferred list. A letter from Molloy states it returned checks last week, after Cuomo’s investigation was making national headlines. Cuomo spokesman John Milgrim said the college signed a “letter of discontinuance” and contends Molloy had a revenue sharing agreement with EFP worth more than $1,600 to the college.
“We are displeased we have been listed in a lump and categorized as a school that engaged in unfair business practices we have never done, never did, never will do,” said Edward Thompson, Molloy’s vice president for advancement.
“We applaud (Cuomo) for pushing the code of conduct. We think it’s the right thing to do,” Thompson said, referring to a code Cuomo’s office devised for dealings between lenders and schools. “We signed an agreement to a code of conduct. We don’t want to admit something we didn’t do.”
He said the college sent back two checks of $800 each to EFP, telling the company to apply it to lower student costs.