After New York Attorney General Andrew Cuomo brought to light questionable practices some college financial aid offices engaged in when creating preferred lender lists for private loans, the fallout was felt nationwide. While colleges and lenders have reformed their practices in the face of new regulations, lawsuits against colleges and lenders are still being addressed.
Yesterday, Emerson College in Boston, one of the schools accused of receiving kickbacks in exchange for making it difficult for student borrowers to take out private loans from lenders not featured on their preferred lender list, settled with the attorneys general bringing the case, and agreed to pay a total of $780,000 to students who had been forced into student loans with less favorable rates. Payments will range from $25 to $833 and will cover the extra interest students are paying on their loans, compared to loans they could have obtained.
These cases serve as a reminder to weigh your options carefully before agreeing to borrow a student loan. Apply for federal financial aid and do a scholarship search first, then compare multiple lenders to be sure you are getting the best rate. Even in the face of a lingering credit crisis and a weak economy, not to mention President Obama's plan to change the face of the student lending industry, it still pays to do your research before taking out a loan.
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