New York Attorney General Andrew M. Cuomo said Wednesday that he was broadening his inquiry to examine the criteria lenders use when making loans, and whether they violate civil rights statutes, The New York Times reported.
Testifying at a Senate Banking Committee hearing on private student loans, which do not carry federal guarantees, Cuomo said he was examining whether lenders were discriminating against students based on the institutions they attended or other factors not directly related to their credit history, the paper reported.
"What criteria are they using in the underwriting of these loans?"Â Cuomo asked, according to the paper. "Parental income? Student income? Student creditworthiness? How about the school you attend? How is that weighted?"Â
While lenders have the right to consider a borrower's credit record, he said, "there are also civil rights and legal ramifications to what criteria they use, and that's what we're looking at,"Â the paper reported.
A number of lenders, including Sallie Mae, which holds more private loans than any other company, consider the institution a student is attending in determining the interest rate, fees and other terms of loans they extend to students, said Barry W. Goulding, a Sallie Mae senior vice president who testified, according to the paper.
But Goulding justified the practice, saying Sallie Mae considered "our experience with the borrowers attending that school"Â to only "a nominal extent,"Â which could result in interest rates up to one percentage point higher. More important, he said, is the credit history of the borrower and the co-signer, usually the students' parents. He said Sallie Mae had looked at the rates it charges students at six historically black colleges and universities: three received the best rates; three received higher rates, the paper reported.- New York State Society of Certified Public Accountants
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