After investigation, Washington University changes student loan practices
By Matt Sepic, KWMU
St. Louis – An investigation by two state attorneys general has led Washington University in St. Louis to change its student loan practices.
Missouri's Jay Nixon and Andrew Cuomo of New York found Washington University had a revenue sharing agreement with California-based Education Finance Partners.
The university could have received financial rewards for each student it sent to that lender.
Nixon said arrangements like this drive up the cost of student loans.
"It's kind of amazing that you sit here and see student loan rates inch up toward 9 percent in some instances, yet if you want to go out and get a pickup truck, you can get it for zero percent," Nixon said. "We want to get that competition back in the market."
Washington University did not receive any money as part of the year-long deal. But it has agreed to abide by a code of conduct that prohibits revenue sharing with lenders.
In a statement, the university says it cooperated fully with the investigations and did not break any laws.
Andrew Cuomo and Illinois Attorney General Lisa Madigan have reached a similar agreement with DeVry University and Career Education Corporation, both based in suburban Chicaog. Career Education Corporation runs Missouri College in St. Louis, along with four Sanford-Brown College campuses (in Collinsville, Fenton, Hazelwood, and St. Peters).
Career Education Corporation will pay more than $20,000 to a national fund set up to educate students about lending.