Teaching the Student Loan Industry a Lesson (1/2)

Imagine this: An official in a position of trust helps you choose a company for a service important to your future. You expect that the advice will be in your best interest.

What you do not know is that the person's office has a financial relationship with that company. The official may have received gifts likes trips or stock options, or money for professional advice.

Would you wonder, then, just whose interest was being served? This is what some American states are investigating in connection with the student loan industry. They are examining possible conflicts of interest when schools direct students to lists of so-calledpreferred lenders.

New York Attorney General Andrew Cuomo says colleges and universities often fail to tell about their ties to banks and other finance companies. His office has already settled cases including with two big lenders.

Sallie Mae, the nation's biggest education lender, agreed to pay two million dollars. And Education Finance Partners agreed to pay two and one-half million. Neither of them admitted any wrongdoing. The money will go to educate students about loans.