U.S. flags hundreds of colleges on student loans

Mon Jul 09, 2007

After months of scandal in the student loan business, a federal regulator said on Monday that recent research revealed a potentially worrisome lack of competing lenders at hundreds of U.S. colleges.

Seventy percent or more of student loans were provided by a single lender at as many as 800 colleges in the last school year, said Jeff Baker, policy liaison at the U.S. Department of Education's federal student aid office.

"That was a little flag to us that perhaps, just perhaps, the institution isn't quite being open enough to their students and parents about who they could borrow from," he told an annual meeting of the National Association of Student Financial Aid Administrators.

The department sent a letter last week to those schools urging them to examine their own internal policies.

"It just stated that we've noticed this data trend and we want to make sure that you look at your own processes to make sure that this very high level of all the borrowers getting loans from the same lender, 70 or 80 percent, is not a violation of any of our requirements," Baker said.

Baker said the department's finding were based on research done last month using the National Student Loan Data System.

Resource: http://www.reuters.com