Controversy over student loans might benefit L.A. company: conflict of interest scandal could add to All Student's market share.Kickback The seller's return of part of the purchase price of an item to a buyer or buyer's representative for the purpose of inducing a purchase or improperly influencing future purchases. deals and aggressive lending practices. Sound familiar? This time it's not subprime mortgages but the controversy over student loan practices, where at some universities--including USC--officials have been found holding stock of lenders recommended to students. It's also a controversy that has not left All Student Loan Corp., the state's largest student loan originator, unscathed--though the Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. lender contends it may end up with an even greater market share when all the dust has settled. "It's a best times, worst times approach we are taking," said Chief Executive Christopher Chapman. The student loan sector has been booming as government aid and scholarships haven't kept pace with skyrocketing college tuition The examples and perspective in this article may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. College tuition . The stakes are particularly high in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, where about $4 billion in new student loans are originated from private colleges and universities such as USC An abbreviation for U.S. Code. and the public University of California The University of California has a combined student body of more than 191,000 students, over 1,340,000 living alumni, and a combined systemwide and campus endowment of just over $7.3 billion (8th largest in the United States). , California State University Enrollment  and junior college systems.
All Student currently has 82,000 borrowers in various stages of repayment from more than 100 colleges and universities statewide. It's organized as a nonprofit, originates an annual average loan volume of $200 million and doesn't sell its loans or service those originated by other lenders. Last month, though, the corporation found itself lumped into the widening controversy over suspected collusion between lenders and universities after a small insurrection by a group of Loyola Marymount University Marymount University is a coeducational, four-year Catholic university whose main campus is located in Arlington, Virginia. History Marymount was founded in 1950 by the Religious of the Sacred Heart of Mary (RSHM) as Marymount College, a two-year women's school. seniors attending a compulsory student loan workshop. The workshops are intended to educate students about their rights and responsibilities as borrowers, and also to alert them about possible pitfalls in consolidating their debt. However, the students said a representative from All Student asked them to fill out forms with personal information while "disparaging dis·par·age tr.v. dis·par·aged, dis·par·ag·ing, dis·par·ag·es 1. To speak of in a slighting or disrespectful way; belittle. See Synonyms at decry. 2. To reduce in esteem or rank. " other lenders' practices in favor of All Student--not exactly the strategy one would expect from a non-profit lender ostensibly os·ten·si·ble adj. Represented or appearing as such; ostensive: His ostensible purpose was charity, but his real goal was popularity. trying to help students pay their loans back after graduation. Chapman called the Loyola episode "unfortunate" and maintains there's a big difference between All Student and for-profit lenders such as Citibank. Indeed, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. lending experts, All Student and similar non-profit lenders generally offer loans with lower interest rates because they are not focused on maintaining Wall Street-level profit margins. The lenders also have lower default levels than most private lenders, largely the result of the lower interest rates, along with loan leniency le·ni·en·cy n. pl. le·ni·en·cies 1. The condition or quality of being lenient. See Synonyms at mercy. 2. A lenient act. Noun 1. and forgiveness policies. For instance, All Student has offered an interest rate cut of 1.25 points after 24 consecutive timely payments and considers payments "on-time" if they arrive within 15 days of a due date. Moreover, the lender is planning to launch a program forgiving $2,500 of debt for students who go into nursing programs. "College costs are continuing to rise and loans are outpacing grants," said Alexa Merrero, a spokesperson for the Education Finance Council, a trade group representing nonprofit student loan lenders. "Within that context you need organizations like All Student Loan to be free of suspicion." For now, all lenders are waiting to see what will happen in the wake of political fallout. Rep. George Miller, a Bay Area Democrat and chairman of the House Committee on Education and Labor, has asked the Federal Trade Commission to investigate marketing practices by student loan companies. All Student is not currently on the list of lenders who Miller is targeting and Merrero hopes that the "pr backlash" and government reforms don't hurt nonprofit lenders. William Markenson, who was named chairman of All Student last month, said the lender is actually betting it can pick up market share from any reforms or industry consolidation. By the Numbers All Sudent Loan Corp. is the largest student loan lender in California * Years in Business: 27 * Employees: 75 * Preferred Lender Status: 100 schools * Five-Year Asset Growth: 150 percent * Current Borrowers: 82,000 * Average Annual Loan Volume: $200 million * Total Loans Financed: $3,3 billion Source: All Student Loan Corp. By JABULANI LEFFALL Staff Reporter |
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