Student loans and the current practices from which they are presented, at the college level advisories, is finally going under federal reviews. For far too long, colleges and universities have been compensated by major lending institutions at the expense of the college students in attendance at these same universities, when suggesting or steering unsuspecting students toward kick-back lenders.
Acquiring a higher level of learning comes with a price and rightfully so, but when the higher education comes with a kick-back to the colleges and universities aside from the tuition and fees associated with the education package, then there is definitely a cause for serious concern.
To explain this, let's say you are enrolled at college and you're expected to pay your tuition and expected fees, then you are obviously short on funds and need financial assistance to pay the tuition. You seek financial aid and ask the college financial counselor what options you have. When they make suggestions as to whom you should or could, obtain student loans from, they are often ‘steering’ you toward a lending institution that is providing payments, special paid trips, or vacations, to the college or to certain college staff members for that service for recommending certain lenders. This is or soon will be an illegal act.
When an institution is charging a fee for services rendered, an education in this example, and they are a party to steering you toward a third party for financial assistance, with kick-backs for doing this, they are double-dipping for a single service or are receiving payments twice for a single service.
Student loans have been in existence for as long as there have been colleges and universities, and the need for financial assistance will continue. The new federal review and investigations should bring an end to the double collecting or steering the colleges from receiving payments or payments in kind from the student loan lenders.
Car dealers practice this method of double dipping as well. You buy a car from them, and you need financing, the lenders they suggest or offer in the deal, can and do receive a similar kick-back from the lending institutions by charging you a higher interest rate and the lender gives a percentage of the loan back to the dealership. Student loans should not be in the same underhanded business as buying a car. Obtaining an education is not the same as buying a car or is it?
I highly recommend you contact your federal, state and local officials to let them know that this practice must stop. Student loan lenders are regulated, as to what the maximum allowed interest they can charge, but they are not regulated at present as to who can receive the incentives for steering an unsuspecting student toward the lender. Even honest and competing student loan lenders are struggling under these practices. One such lower charging lender, MyRichUncle.com is being squeezed by this practice. When you are driving out honest student loan lenders by underhanded dealings, this is wrong and should be stopped.
Jim is an online writer and entrepreneur, keeping his readers abreat of current events and hot topics on and off the web. Today he is discussing student loans and their lending practices.