Since coming to office last January, New York Attorney General Andrew Cuomo has been investigating the $85 billion student loan industry. On March 15, his office accused a number of private lenders and financial aid officers at over 400 universities and colleges nationwide of engaging in questionable business practices—suggesting students take out loans from lenders that they have a financial stake in. It is a story that has since exploded and come to involve members of the highest echelons of educational administration, including SUNY Chancellor John Ryan.

The issue at hand is a seemingly blatant conflict of interest—financial aid officers at various institutions of higher learning are benefiting, often with stock options or direct cash payments, by proffering certain loan companies to the cash-strapped students who come to them for advice. Many schools have what is known as a “preferred lender list,” a brief list of lending institutions that the school’s aid officials recommend, either for their low interest rates or high approval rate, even for students with poor credit. According to Cuomo, 90 percent of students then choose a company from that list, trusting that university officials are looking out for their best interests.

That would seem to be a logical assumption for students to make, but financial aid workers at multiple schools have been discovered profiting from some of those lenders during Cuomo’s investigation. For example, the director of financial aid at Johns Hopkins University made arrangements to endorse Student Loan XPress, a subsidiary of CIT Group, in exchange for over $21,000 towards her graduate school tuition. Her influential position made it possible for her to sway students to go into debt with a particular company while netting her extra money—one student’s deficit became another’s gain.

This story has continued to balloon over the last month. The investigation has spread like wildfire, with figureheads such as Matteo Fontana, the Department of Education official charged with oversight of the entire student loan industry, yielding over $100,000 from the sale of his 10,000 shares of Education Lending Group, former parent company of Student Loan XPress, which was bought by CIT Group in 2005.

Cuomo’s investigation has expanded to a number of lenders, including Sallie Mae, CitiBank, M&T Bank, KeyBank, Bank of America, Access Group Inc., and CIT Group, according to Bloomberg.com. Sallie Mae and Citibank, two of the largest lenders in the U.S., have since cut a deal with Cuomo to terminate the investigation, promising to implement a code of conduct system to govern their business practices, and claiming that they committed no illegal activity. All it cost them was $2 million dollars each, money which is being shunted into a national fund to help educate families about the financial aid industry, according to SUNY Binghamton’s Pipe Dream newspaper.

With Cuomo crusading on the issue, it may seem strange that these institutions were able to strike such an agreement so quickly. Because his investigation is a civil matter, however, individuals and companies implicated are unlikely to face criminal charges. Thus, Sallie Mae’s and Citibank’s buyout is merely a preemptive measure, paying a fixed sum now rather than a potentially higher figure that might have arisen if faced with continued litigation.

Meanwhile, CIT Group has been involved with a bevy of controversy. Last week, the Associated Press reported that three members of their executive board were put on paid leave in the wake of subpoenas issued by Cuomo’s office seeking further information on stock options or other gifts made by the company to state and federal officials.

But not all of CIT’s board members were put on leave. One of the most conspicuous of their active members is our own SUNY Chancellor, John Ryan, who has been a paid member of the CIT Board of Directors since 2003. Bloomberg.com reports that he has netted a tidy sum from his prestigious position, pulling down $146,474 in stock options and pay last year alone, a figure which is nearly half of his $340,000 yearly salary as Chancellor. Ryan defended his position in a statement, saying that his post was approved by the state ethics commission the year he was appointed and was again approved in 2005. Ryan will be leaving the SUNY system in May when he leaves for North Carolina’s Center for Creative Leadership, a move that was announced prior to revelations of his CIT association.

While CIT does not appear on UB’s preferred lender list, it is composed exclusively of other lenders currently under investigation. The five lender list, composed of Access Group Inc., Bank of America, Citibank, KeyBank, and M&T Bank, can be found on the Alternative Loans page of the Financial Aid website. UB, along with the other 63 SUNY institutions signed onto a code of conduct agreement with the Attorney General’s office on April 2, promising to be more forthcoming with information to families and students about the financial aid process.

But at least one SUNY institution, New Paltz, was discovered to have entered into an agreement with lenders. According to an article printed last Thursday in the Hudson Valley’s Times Herald-Record, the school had made a one-year agreement in 2005 with Education Finance Partners, based in San Francisco, to receive 0.025 percent of loans beyond $1 million. Only nine students entered into debt with the company, however, and the agreement failed to provide any funds for the school. The deal expired in March 2006 and was not renewed by New Paltz officials.

Cuomo’s investigation has continued to expand, growing beyond state boundaries. Pursuing the investigation outside of New York has raised questions as to Cuomo’s out of state jurisdiction. Matthew Glazer, a spokesman for Cuomo, told Arizona’s East Valley Tribune that “The attorney general represents New York’s students, so if the state’s students are affected, it’s our concern.”

With tuition costs rising steadily, students continue to seek loans to pay for their higher education. This investigation has raised serious concerns about how much students can really trust their campus-based advisors to help them in their search for the most sound method to obtain those funds. The Attorney General has made a hearty effort so far to help clean up the corrupt behaviors, and as the investigation continues, hope lies at the end of the road that students will soon be able to once again receive trustworthy recommendations and help from their financial aid departments.