CollegeBoard caught with hand in cookie jar
I bet you'll be surprised about how student loans REALLY work. Here's what I mean.
On Monday, NY Attorney General Andrew Cuomo announced a settlement with the College Board over its former loan practices.
That's right, that's the same College Board that tortures high schoolers with the SAT, the CSS/Profile financial aid form and other familiar items. Apparently the Board was making money from sources other than test registration fees, like lending to students. Which in it self isn’t bad, it’s just how they got the business.
Attorney General Cuomo had a problem with the way in which the College Board was conducting this business.
Cuomo found that the College Board gave discounts to certain colleges, breaks related to prices paid by the financial aid offices for software and other services.
How did these colleges earn this special pricing from the College Board? By placing College Board loans in their list of recommended, or "preferred" lenders.
Its bad enough that parents and students have to jump through so many hoops to get aid and you pratically need a law degree and lawers dictionary just to understand the who-for what-too and such-not that is described in the Higher Education Opportunity Act.
In other words, the College Board was alleged to have "bribed" (my word, not Cuomo's) these colleges into advertising the student loans offered by the College Board.
It kind of gives you the feel of a shady guy in a pinstriped suit that just stepped out of his Ford Model T and tells the storeowner if you want protection you gotta pay me. (Yeah I may be embellishing this but it makes for a better read!)
"Loans are hard enough to come by these days; the last thing we need are deceitful arrangements like this one that stand squarely in the way of students and parents getting the facts," said Cuomo.
And I bet you thought the company that issues the SAT was a non-profit or educational institution, right?
Nope, they're in business like everyone else involved in higher education. They're out to make a buck.
Side note: J.D. the College Guy has been touting this for years! College is BIG business. If the profits don’t come in the college will shut its doors.
Not that there is anything wrong with that, of course. I make a nice living advising parents of college-bound kids how to slash their college expenses. Everyone is entitled to make a few dollars, no matter who is President!
The real issue is the deceptive manner in which the College Board, and the colleges themselves, allegedly made their money Like a three year old with their hand in the cookie jar they admitted no wrongdoing, not surprisingly.
When you go to apply to college, understand the main point made by this blog - that college is a BUSINESS. Big Business, and in the case of some colleges really big business. We won’t mention Harvard who has a nice bank account in the $35 billion range even in todays market.
This knowledge should affect almost everything you do regarding your student's college education, including where you apply for admission, how you apply for financial aid, how you apply for other scholarships and how you negotiate a financial aid award letter, among others.
If you don't understand this, you're setting yourself up to over-pay needlessly for your student's college education. You could be forcing your future college student to attend a "cheaper," less-desirable college, than if you paid attention to the business of college.
