LINCOLN, Neb.-
The New Jersey attorney general has subpoenaed Lincoln-based Nelnet and 16 other student providers as part of his probe into payments aimed at having colleges promote certain loan companies.
The news comes as alumni associations for graduates of the Omaha, Kearney and Lincoln campuses of the University of Nebraska acknowledge they’ve been subpoenaed as part of New York’s investigation of their loan consolidation agreements with Nelnet.
New Jersey Attorney General Stuart Rabner on Friday announced that he also subpoenaed 61 New Jersey colleges and universities as well as the New Jersey Higher Education Student Assistance Authority. The authority oversees the state’s college financial aid programs.
“Our investigation was launched to determine whether colleges have been improperly steering students to preferred lenders that don’t have the best rates,” Rabner said. “What we would hope and expect is that colleges maintain preferred lender lists only with students’ financial interests in mind.”
Rabner also wants to find out whether lenders’ employees have provided direct assistance to financial aid offices, giving the lenders special access to potential borrowers.
New York Attorney General Andrew Cuomo has said he has found cases of colleges getting a percentage of loan proceeds from lenders granted preferred status by the schools.
Loan consolidation allows borrowers to repackage debt—often held by several banks or lenders and covering undergraduate and graduate studies at different schools—into a single loan.
Nelnet said earlier this week that its agreements with 120 alumni groups are legal under federal law.
“Nelnet has concluded that these affinity and license agreements do not constitute prohibited remuneration and are permitted under federal law,” Nelnet said in a prepared statement.
The company said it uses member lists to market its consolidation loans and uses the alumni association’s logo. Nelnet pays the alumni group a fixed or annual fee for each loan. Nelnet said alumni associations don’t recruit customers.
Efforts Saturday to reach officials of the University of Nebraska alumni associations were unsuccessful.
Nelnet serves students in 50 states, has about 4,000 employees and $23.8 billion in net student loan assets, according to the company’s Web site. It originates more than $6 billion a year in loans for itself and clients.
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On the Net:
Nelnet:
New Jersey attorney general:
New York Attorney General:
University of Nebraska-Lincoln alumni:
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Information from: Lincoln Journal Star,
