FAP505: Preferred lender list battles, writing scholarship, 529 plans, Rayko KRB

FAP505: Preferred lender list battles, writing scholarship, 529 plans, Rayko KRB
Student Financial Aid News+ From BankNet360: New York Attorney General Andrew Cuomo is threatening to sue Arizona State University over a profit-sharing deal with a San Francisco-based student lender.+ ASU’s agreement with Education Finance Partners allows the firm to use the school’s logo on promotional materials and also calls for school financial aid officials to suggest the Education Finance Partners to prospective student borrowers.+ Cuomo’s terms include a ban on schools from receiving anything of value from lenders. They also include rules on developing preferred lenders lists and a provision that would bar lenders’ from identifying themselves as university employees and working out of school financial aid offices.+ The threat comes just days after some New England schools accepted settlements over similar disputes. ASU said it is working to settle.+ From Inside Higher Ed: On Wednesday, the other shoe dropped in a growing investigation of colleges’ ties to the lenders they recommend to their students — and many experts on the loan programs were stunned by the developments.+ Administrators at Columbia University, the University of Texas at Austin and the University of Southern California were reported to have owned stock in a lender that they placed on their “preferred” list for students. Andrew M. Cuomo, New York State’s attorney general, sent a subpoena to Columbia Wednesday and letters to the other institutions, seeking details. The colleges involved are not disputing the stock ownership, which was reported in public filings.+ “We are seeing more and more suspicious practices and dealings between university officers and loan companies come to light,” said a spokesman for Cuomo. “This creates even more questions about the integrity of the student loan industry and the process by which colleges steer students to loans.”+ In contrast, the arrangements that came to light Wednesday involved university administrators personally holding stock in a loan company and apparently doing well with their stock sales.+ The National Association of Student Financial Aid Administrators, which has been critical of the Cuomo investigation, accusing the attorney general of hurting the reputations of aid officers, issued a statement Wednesday night saying that the group “believes it would be inappropriate for a school to place a lender on a preferred lender list in exchange for shares of stock.”+ However, the statement went on to say the following: “We would also note that if the financial aid administrator purchased the stock with their own funds, their ownership of the shares may not be evidence of improper conduct, but would certainly present the appearance of a conflict of interest. NASFAA advises its members to perform their functions with the interests of students as their foremost priority and believes that any activity that conflicts with that priority represents a questionable practice.”+ What does this all mean for you as a student?+ Fundamentally, it comes down to understanding choice in student loans - that despite what anyone tells you, you do have choice in all your student loan options+ Research as much as you can - check out Student Loan Network offerings for Stafford federal student loans, federal parent PLUS loans, and private student loans, 100% payola-free.
Scholarship Update+ Point of irritation - found a decent looking scholarship until $15 fee+ Don’t pay for scholarships+ Antioch College Writers Workshop Scholarships+ Deadline May 1, 2007+ Variety of awards, including for single mothers+ Details at our free college scholarship search site
Mail Bag+ Jason writes in: I am just a few years out of school and in the work force. Can I start a 529 plan for myself, knowing that I may wish to drop work and go back to school full-time eventually?+ Two types of 529 - prepaid tuition, which locks in today’s tuition rates+ College savings plans - tax exempt investments+ Yes, a student can take out a 529 in their own name+ Financial aid speaking, a non-custodial 529 is assessed at 20% for the student, same as any other investment asset+ Tax benefits are better than most benefits, including no federal, state, or local taxes for the most part and the ability to roll over other savings, like savings bonds, into 529s with no tax penalty+ No tax hit when a plan’s funds are redeemed for qualified education expenses, namely tuition, room, and board+ Great overview of 529s at FinAid.org+ Disclaimer: I’m not a certified financial planner or CPA
Podsafe Music+ Rayko/KRB, Charp+ From our friends at Binary Star Records+ Music via the Podsafe Music Network+ Stop by our MySpace page!
Reminders+ Private student loans available at any time - visit AlternativeStudentLoan.com+ Stafford federal student loans at StaffordLoan.com+ Student loan consolidation at StudentLoanConsolidator.com+ FAFSA form tutorials and free help at FAFSAonline.com+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.+ The Financial Aid Podcast is a publication of the Student Loan Network.