Representatives from state Attorney General Andrew Cuomo's office offered advice about the student loan industry to a dozen parents and students at the Jewish Community Center of Schenectady on Monday, July 21, as part of a community partnership initiative.
The presentation came only a few hours after Gov. David Paterson announced his support of a proposed state program that would allow hundreds of thousands of students to benefit from low interest loans in a statewide effort to combat the steep cost of college tuition.
Assistant Attorney General Carolyn Fast said that taking out a college loan is one of the biggest decisions parents and students will make in their lives. According to Fast, approximately 60 percent of all students will borrow money to pay for college.
It's like taking out a mortgage, said Fast. "It affects a student's choices after they graduate. It affects when they can buy a house or when they can buy a car."
That's why, said Fast, students and parents need to be wary of commercial lenders who often tempt students with too-good-to-be-true promises and free giveaways.
Fast advised students to take advantage of federal loan programs which generally have a guaranteed fixed rate, unlike commercial loans which often carry variable rates.
Fast said students can save in the long run if they can start paying on their loans while they're still in college, rather than deferring them until after graduation.
Fast's advice comes about a year after Cuomo launched a nationwide investigation into the student loan industry. The investigation discovered widespread corruption, including the illegal steering of students to preferred lenders by specific schools, and revenue sharing agreements between schools and lenders.
Cuomo's findings led to last year's passage of the Student Lending Accountability, Transparency and Enforcement Act which gives students and families the right to choose a lender, even if the lender is not included on the school's preferred lender lists.