CIT Group Inc., CIT's Student Loan Xpress

New York, NY: (May-10-07) New York Attorney General Andrew Cuomo's office had filed charges against CIT Group Inc. and CIT's Student Loan Xpress unit, over the state's investigation of abuses in the US student loan business. An investigation into CIT's business practices showed that Student Loan Xpress had provided meals, entertainment and gifts to school officials, as well as sponsored advisory boards of financial aid officers and funded free trips to meetings. The New York-based commercial and consumer lender agreed to pay $3 million into a fund that will educate students about financial aid, reform its business practices and assist the state in its investigation into lending officials. The CIT settlement adds to the list of more than 22 colleges and universities who adopted Cuomo's code of conduct, which bans financial relations with lenders. The settlement is a result of a state wide investigation into the practices of the $85 billion-a-year industry in which conflicts of interest can result from undisclosed financial relationships between lenders and colleges. Cuomo has argued that lenders used payments and perks to curry favor with schools and school officials in order to win the coveted "preferred lender" designation. Nine out of ten students choose a lender recommended by their school. [CNN NEWS: STUDENT LOAN FRAUD]

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Published on May-14-07