Chairman Miller on Student Loans and Conflicts of Interest
April 11th, 2007 by Jesse LeeThis just in from Bloomberg:
Sallie Mae to Pay $2 Million to Settle Lending Probe (Update2)
Karen Freifeld, Bloomberg - April 11, 2007
SLM Corp., the largest student loan company, will pay $2 million and adopt a new code of conduct to settle an investigation by New York Attorney General Andrew Cuomo into deceptive loan practices and college kickbacks.
The settlement amount paid by SLM, also known as Sallie Mae, will be added to $2 million Citigroup Inc. will pay to educate parents and students about student loans, Cuomo said today in a press conference in Manhattan.
The article also gives some background on the investigation:
The U.S. Department of Education, which oversees federal lending, put a top official on leave after Cuomo disclosed he also held stock in the unit of CIT, the largest U.S. non-bank commercial finance company.
This morning Chairman George Miller of the Education and Labor Committee wrote to CIT Group, the parent company of Student Loan Xpress, requesting information about the company’s relationships with colleges’ financial aid offices:
April 11, 2007
Mr. Jeffrey M. Peek
Chairman and Chief Executive Officer
CIT Group Inc.
505 Fifth Avenue
New York, NY 10017Dear Mr. Peek:
I write regarding the disturbing revelations that at least one senior federal official at the U.S. Department of Education and financial aid administrators at three universities held stock in the parent company of Student Loan Xpress, CIT Group – a participating lender in the Federal Family Education Loan Program (FFELP) – at the same time that these individuals held influential positions with respect to overseeing lenders participating in the program and in recommending lenders to students and parents who borrow under the program. As Chairman of the Committee with oversight of the administration of educational loans and other student aid provided to students and their families, I seek specific information about the relationships between your company and schools’ financial aid offices. My specific questions about these relationships are enclosed. Please produce the documents and information requested within 10 days of receipt of this letter.
I respectfully request that you coordinate the production of the information requested with Michael Zola, Chief Investigative Counsel, House Education and Labor Committee at (202) XXX-XXXX.
Sincerely,
GEORGE MILLER
Chairman
cc: Buck McKeon