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Multi-State Agreements Reached in Student Loan Investigation

Illinois, Missouri Schools Agree to Code of Conduct

April 24, 2007

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The first multi-state settlements have been reached in New York Attorney General Andrew M. Cuomo’s nationwide student loan investigation.

Cuomo and Missouri Attorney General Jay Nixon announced an agreement with Washington University in St. Louis, over its student loan practices. And Cuomo and Illinois Attorney General Lisa Madigan announced agreements with DeVry University and Career Education Corporation, two for-profit post-secondary institutions.

Washington University signed an agreement with New York State agreeing to the College Loan Code of Conduct and a separate agreement with the State of Missouri. New York and Illinois jointly signed the agreements with DeVry and CEC.

“Across the country, momentum is building behind our investigation into the student lending industry. The Code of Conduct is being adopted nationally as the paradigm for best practices in the industry,” Cuomo said. “Cooperation between states is vital to our goal of enhancing the integrity of the student loan process and helping students nationwide.”

“Students and their parents often are presented with limited choices and information on lenders,” Nixon said. “They may feel unempowered as consumers, being steered to particular lenders without receiving sufficient data to make fully informed choices. We want to make certain our concerns about students being able to make informed decisions to get the best loan interest rates are fully addressed.”

"Illinois students are entitled to full disclosure of the criteria used to place lenders on the schools' preferred lender lists and should have access to all of the information necessary to ensure that they are able to choose the loan that is best for them," said Madigan. "We acknowledge DeVry University and Career Education Corporation for promptly adopting the College Code of Conduct. We will continue to review the school loan lending practices of all the schools in Illinois."

DeVry University: Oakbrook Terrace, Illinois-based DeVry has 80 campuses in the U.S. and Canada, including campuses in New York State. DeVry was paid $88,112 by Citibank under a revenue sharing agreement. DeVry received 200 basis points on all loans referred to Citibank in 2004 and 2005.

Under the agreement, DeVry will reimburse $88,112 to affected students. DeVry employees also sat on lender advisory boards and were reimbursed for travel and meals to advisory board meetings. DeVry, having now signed the Code of Conduct, will stop all of these practices.

Career Education Corporation: Career Education Corporation, based in Hoffman Estates, Illinois, has campuses in New York State. Two lending institutions made a total of $21,200 donations to CEC’s scholarship fund. CEC will contribute $21,200 to the Consumer Education Fund, which will be a nationwide consumer education fund for high school students and parents.

Washington University: Washington University in St. Louis had a revenue sharing agreement with Education Finance Partners in 2005, but received no payments under the agreement. Additionally, two lenders paid for the printing costs for informational materials provided to prospective and current students.

Cuomo’s nationwide investigation into the student loan industry has already resulted in agreements with Citibank, Sallie Mae, and Education Finance Partners and 15 universities or schools.

In addition to those just announced, the schools are: NYU, University of Pennsylvania, Fordham University, Syracuse University, St. Johns University, 29 State University of New York campuses, Long Island University, Salve Regina, Molloy College, Pace University, and the New York Institute of Technology.

Eight schools have agreed to reimburse students over $3 million for the cost of revenue sharing agreements. Those schools are NYU, Penn, Fordham, Syracuse, St. Johns, LIU, Salve Regina, and DeVry. In total, the three lenders have agreed to put $6.5 million into a consumer education fund to educate high school students and their parents about the college loan process.

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