Constituent Services
September 8, 2008

With high school seniors across Buffalo starting school and considering college next year, New York State Attorney General Andrew M. Cuomo, joined by Congressman Brian Higgins, today announced a new national Student Bill of Rights law to protect students and their families from being deceived by banks who pay-off schools to get student business.


Attorney General Cuomo was also joined by West Seneca High School students, State Senator William Stachowski and Assemblyman Mark Schroeder to announce new protections of the federal government’s Higher Education Opportunity Act of 2008 that was modeled after a state law that he authored last year, the Student Lending Accountability, Transparency, and Enforcement (SLATE) Act of 2007. Together, the bills arm all high school students – wherever they go to college – and their families with more information to make informed decisions on finding the best option to pay for school and avoid the corrupt and deceptive practices uncovered by Cuomo’s investigation. He also introduced a new educational DVD and other materials designed to provide relevant information on student lending.


“We are committed to equipping college-bound students with the knowledge they need to navigate through the confusing financial aid process and avoid drowning in debt,” said Attorney General Cuomo. “Our Code of Conduct here in New York has served as an example for the rest of the nation on how to protect college-bound students from deceptive lending practices. The new federal legislation, based on our code, extends those rights and protections to students across the entire country.”


Congressman Brian Higgins said, “Attorney General Cuomo’s investigation into widespread conflicts of interest in the student loan industry has led to reforms on both the state and federal levels. These legal protections help make navigating the tumultuous field of college lenders an easier ordeal. Being an informed consumer is key to making the right choice, and I applaud Attorney General Cuomo for making sure that college-bound students know what questions to ask and what scenarios to avoid.”


Cuomo’s office produced and is distributing an educational DVD to guide New York state students through the often confusing and complex road to financing a college education. The DVD, Safeguarding Your Future: One Student Loan at a Time, addresses students’ funding options, ways to minimize borrowing, and how to choose the best loan. The video shows students how to exercise their rights under the law to avoid pitfalls in the college loan industry and get loans that fit their best interests. To order a free copy of the DVD, go to


Also, Student Bill of Rights cards were handed out to students at today’s event, as well as an informational brochure on student lending produced by the Attorney General’s office. The cards describe students’ rights under state and federal law and list important questions students should ask lenders and financial aid administrators before they choose a loan.


The Student Lending Bill of Rights, which became law in New York state on May 29, 2007, was signed into federal law on August 14, 2008. The majority of the provisions of the federal measure went into effect September 1. The state law and the new federal law - both modeled on Cuomo’s ground-breaking Code of Conduct - will give students and their families:


  • The right to unbiased advice about loans and lenders from a school’s financial aid office;
  • The right to choose the lender that is best for the student, even if that lender is not included on a school’s preferred lender lists;
  • The right to compare loan offers so students can choose the loan that is best for them.  Private lenders are now required to hold loan offers open for 30 days, in order to give students and parents time to compare loan offers.


Last fall, Attorney General Cuomo developed the student lending Code of Conduct after his nationwide investigation exposed widespread corruption, deceptive practices and conflicts of interest in the student loan industry. The investigation revealed that some lenders were providing payments and perks to colleges and universities – and to financial aid administrators – in return for benefits from the schools, including placement on the schools’ “preferred lender” lists. The new federal legislation prohibits these practices and extends the Code’s protections to students and families across the United States. 


Attorney General Cuomo’s investigation also focused on lenders deceptively marketing their loans with “as low as” rates that were not available to most students. Many students ended up with loans with far higher rates than they were led to believe. The new federal law now requires private lenders to provide personalized information to students about the cost of loans, and to hold loan offers open for 30 days to permit students to comparison-shop for the best deals.


Attorney General Cuomo informed students of their rights under the new federal Higher Education Opportunity Act, which requires colleges and universities to develop a code of conduct with respect to federally guaranteed loans that:


  • Prohibits “revenue sharing,” a practice where lenders provide payments or other benefits to schools in exchange for the schools’ promise to recommend that lender to students
  • Prohibits financial aid officers from accepting any favors, meals, entertainment or other gifts from a lender
  • Prohibits financial aid officers from assigning first-time borrowers to particular lenders and from refusing to certify loans based on a borrower’s selection of a particular lender
  • Prohibits the college and university from using a lender’s employees to staff the financial aid office or a financial aid call center


The Act also includes requirements related to private loans, such as:


  • Prohibiting private lenders from offering gifts or other items of value to colleges or financial aid officers in exchange for advantages related to the lenders’ loan activities
  • Prohibiting private lenders from charging prepayment or repayment penalties
  • Prohibiting misleading ‘co-branded’ marketing, where a lender or marketer uses a school’s name, emblem, mascot, and/or logo to create the false impression that the school has endorsed the lender
  • Requiring private loan providers to inform borrowers of the availability of federal aid and the interest rates available in connection with federal loans


Senator Bill Stachowski said, "As students begin the loan application process, they must be aware of certain risks that, if not handled prudently, could prove to be disastrous for the borrower. I'm very happy to have Attorney General Cuomo here today to help explain the risks that exist in the student loan industry and pass along tips to avoid unscrupulous lenders. It's clear that the Attorney General is relaying vital information to our students, and for that he should be applauded."


Assemblyman Mark Schroeder said, “Andrew Cuomo’s tenure as Attorney General has proven him to be a leader who cares about the challenges that many families face every day. Finding a way to paying for college certainly qualifies as one of those challenges. Thanks to his office’s endeavor, college-bound students have a level playing field from which to make an informed financial decision. I’m proud to be a partner in this effort and hope all students make use of the information we’re providing.”


Cuomo highlighted some of the worst practices identified by his office during his nationwide investigation into the student loan industry. The investigation uncovered among other things, illegal steering to preferred lenders by specific schools, revenue sharing agreements between schools and lenders, university financial aid call centers staffed by lender employees, gifts and trips from lenders to a school’s financial aid directors, and even stock in lender companies directly given to financial aid officers.


Focusing, as well, on his office’s investigation of lenders which market loans directly to students, Cuomo warned students and their parents to be wary of a range of deceptive practices employed by lenders.  Those tactics include: sending mailings that appear to be from the federal government, luring students with promises of gifts and prizes to distract them from the actual cost of the loan, and promising discounts on interest rates triggered upon repayment (“borrower benefits”) without ensuring that those rates will be available if the lender sells the loan.


Cuomo’s website,, provides New York state students and their families with tips on how to identify the best student loans. Copies of the Student Bill of Rights and more information can be found online.


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