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Student Loan Shake-Up Leads to New Senate Bill

The shake up is still not over for student loan providers, according to a news report today by CNN.

New York Attorney General Andrew Cuomo has discovered that many banking institutions charge significantly higher student loan interest rates to those attending lower-ranked colleges and universities. While students at elite colleges may pay 8% or 9% interest on their loans, less fortunate students at other schools may pay up to 14%.

Does this scenario sound familiar? It should. Banks pulled similar shenanigans in a now-illegal practice known as β€˜redlining’, involving home mortgage loans. In this discriminatory practice, lenders utilized maps that outlined and rated neighborhoods based upon racial and economic factors. As a result, minorities – especially African Americans — were often either denied mortgage loans or were charged significantly higher mortgage interest rates.

Now, traditional and online degree students are being judged based upon the college or university they attend, rather than by individual credit ratings. Wealthier students appear to pay less for their loans than the middle income students who populate the mid-range to lower-ranked schools.

However, the efforts of Attorney General Andrew Cuomo have been fruitful, as his investigations have uncovered enough evidence to spur Congress to consider passing a new bill to outlaw this practice, which should encourage a fair system of determining interest rates in the $85 billion student loan industry. The House has already passed the bill; and it is expected to pass the Senate.

In the meantime, students should be careful to shop around and choose a student loan that does not unfairly cost them extra interest payments.

The new congressional bill is appropriately called the Student Loan Sunshine Act. And I say, “Let the sunshine in”.

student loan, financial aid, banks, African Americans, online education, distance learning, education, college, university, Senate, House of Representative, New York, Andrew Cuomo, discrimination, redlining, Senate, mortgage loan, interest rate

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Posted by vida

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