Nelnet, GMAC settle with Cuomo over student lending

Nelnet Inc., GMAC Bank and EduCap Inc. were among seven student-loan companies that settled with New York Attorney General Andrew Cuomo over allegedly deceptive marketing.

The companies agreed to new standards that ban solicitations designed to look like they were from the government; prohibit advertising interest rates unavailable to most of their borrowers; bar prizes and other contests to entice clients; and stop payments to students who get friends to take out loans, according to a statement today from Cuomo’s office.

Cuomo has been probing the $85 billion student-loan industry since he took office in 2007 for conflicts of interest that included payments and perks to colleges and financial-aid officers. About a dozen lenders and 26 colleges and universities earlier reached agreements to cut financial ties and abide by a code of conduct.

“These settlements are a major step forward in cleaning up an industry where false and misleading advertising practices have been all too rampant,” Cuomo said in a statement today. Read full story. (Bloomberg.com)

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