Charges against student loan lenders.

NEW YORK STATE'S ATTORNEY GENERAL Andrew Cuomo stole a page from Eliot Spitzer's book when he took on the student loan industry in March. Spitzer, Cuomo's predecessor and now governor of New York state, made a political name for himself by questioning practices in the insurance and financial services industries.

Now Cuomo is taking on corteges, universities, and the banks and tenders who are on their "preferred tender" lists. Cuomo has launched an investigation and says he will be filing a lawsuit to stop what he carts "deceptive practices" in the student loan industry.

"An unholy alliance" is his description of the relationship between IHE and lender, noting that some financial firms give lucrative kickbacks to schools who steer students and their parents to them in order to take out loans. His March 22 statement charges Education Finance Partners with awarding basis points on loans written to students at Duquesne University (Pa.), Boston University, Drexel University (Pa.) and nine other IHEs. These points transtate into payments made back to the universities. Cuomo charges that EFP paid Drexet $100,000 in a single year. In all, the money EFP and other tenders pay to corteges and universities adds up to millions. Students, meanwhile, rely on these preferred tender lists, with 90 percent of borrowers going with the banks and organizations that an IHE recommends.

Cuomo's charges made national news in March. CBS specifically questioned some of Sallie Mae's practices and alleged travel perks provided to an executive at The University of Texas System. The tender immediately issued a retort. A press release issued in mid-March denies that the tender paid for any travel for this exec, and further defends guaranteed student loans. Sallie Mae's statement says that these loans save students more money in the long run than those provided by the Direct Lending program.