When Loretta Medeiros’ financial aid letter from New York University arrived last summer, she remembers seeing just one lender mentioned: Citibank.
Assuming it was the only lender NYU worked with, Medeiros borrowed nearly $29,000 in a private loan for graduate school. But this year, when she needed $3,000 more, she decided to ask NYU if other lenders were available. The university directed her to a school website, where she says she found a lower-cost option that will save her money.
“I was kind of going in blind” in seeking loans, says Medeiros, 23. “I wish I’d known there were other options, instead of (the school) throwing a main bank in my face.”
Concerns that such students are paying too much for loans because of questionable ties between lenders and universities are reaching a boiling point. With New York State Attorney General Andrew Cuomo set to testify before a House panel today about his probe of the student-loan business, the industry could be on the verge of transformational change.