ABC Parrots Cuomo's Attack on Loan Industry
The student loan business might be taking advantage of college students, according to ABC âWorld News,â but viewers will just have to trust the network about the particulars.
Anchor Dan Harris reported March 18 on an announcement by New York State Attorney General Andrew Cuomo, who said he is investigating financial incentives provided to universities by student loan companies to become âpreferred lenders.â But Harris didnât explain how students were getting a raw deal, nor did he include representatives of the institutions under attack.
Harris interviewed one sophomore student who âsays he trusted NYU, but now he wonders if his trust may have been misplaced.â When he applied for financial aid there, the student said, the financial aid office provided a list of preferred lenders. But now, he said, âI have to re-evaluate where I think NYUâs priorities are.â
Neither the student nor Harris provided any information about the aid the student now questions. Not the rate, not the monthly payment, not the duration of the loan, and therefore no comparison to any other offers that might have been superior.
Instead, Harris detailed Cuomoâs charges.
âThe lenders are preferred by the school, says Cuomo, because they often give the schools kickbacks. Some lenders give institutions such as NYU a percentage of the loans sent their way,â Harris said. âOther lenders such as Educap have given financial aid officers all-expenses-paid trips to exotic locations ... And sometimes lenders such as the company Sallie Mae set up call centers for schools. That means when students at Pace University in New York call the financial aid office they're actually talking to an employee for the loan company Sallie Mae.â
Cuomo, who is investigating about 100 colleges and universities, said 90 percent of students end up getting loans from preferred lenders, and faulted schools and lenders for âillegal, deceptive business practices.â
No colleges, universities or loan companies were interviewed on-air, even though other outlets including The New York Times and the Associated Press gave institutions such as Educap and Sallie Mae a chance to defend themselves in their own words.
Harris could have talked to industry experts to represent the other side, such as Dallas Martin, president of the National Association of Student Financial Aid Administrators. Martin released a letter on March 19 that he sent to Cuomo, faulting the attorney general for being âunfamiliar with the student aid processâ and defending his membership as honorable and ethical.
Instead, Harris spent a few sentences relaying denials from parties including NYU, Pace, Sallie Mae and Educap â including the defense that call centers donât push Sallie Mae loans â before quickly moving to a video of Cuomo warning students not to be deceived.
âQuestion the school. Question the advice the school is giving you. Read the documents,â Cuomo said.
Those are wise practices in any business relationship, but if the accused parties had been allowed to respond personally, they could have corrected some misperceptions.
Educap doesnât even work with financial aid offices, according to a statement issued by the company, but offers loans directly to students and their families. Educap also said it supports legislation to strengthen disclosures about relations between lenders and financial aid. A Pace public affairs official told The New York Times that it uses âsecret shoppersâ to make sure the call center run by Sallie Mae doesnât provide biased advice.
In contrast, Harris merely passed on the disclaimer that several major lenders âall denied wrongdoing.â