NEW YORK
The nation’s largest student loan provider will stop offering perks to college employees as part of a settlement announced Wednesday in a widening probe of the student loan industry.
SLM Corp., commonly known as Sallie Mae, also agreed to pay $2 million into a fund to educate students and parents about the financial aid industry, and it will adopt a code of conduct created by New York Attorney General Andrew Cuomo, who is heading the probe.
Cuomo says the expanding investigation of the $85 billion student loan industry has found numerous arrangements that benefited schools and lenders at the expense of students. Investigators say lenders have provided all-expense-paid trips to exotic locations for college financial aid officers who then directed students to the lenders.
“Our position is very simple,” Cuomo says. “Loan decisions should be made in the best interest of the students, and not the best interest of the school.”
Sallie Mae CEO Tim Fitzpatrick said in a statement Wednesday, “We are pleased that Attorney General Cuomo has recognized Sallie Mae’s leadership in the student loan industry and our ethical market practices with students and schools.”
Investigators found that many colleges have established “preferred lender” lists and entered into revenue sharing and other financial arrangements with those lenders. Some colleges have “exclusive” preferred lender agreements with the companies.
