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Cuomo Gains Momentum Investigating Student Loan Practices
More questionable student loan practices have been brought to light by New York’s attorney general, Andrew Cuomo. In fact, one of the front-page stories of today’s New York Times focuses on the questionable relationships that Student Loan Xpress—the eighth-largest student loan agency—has developed with the financial aid directors of certain colleges and universities .
Corruption or Reducing Marketing Expenses?
The idea that financial aid directors of colleges and universities would give biased advice to students is disturbing on many levels; and surely that is why Andrew Cuomo has attracted so much media attention.
The fact remains though, that companies like Student Loan Xpress are trying to find the easiest and least expensive way to make their services available to as many students as possible. If Cuomo’s allegations are correct, it seems that Student Loan Xpress has found a way to reduce marketing costs by contacting prospective clients directly through financial aid directors.
In essence, the problem is the “wolf in sheep’s clothing” that the financial
aid officer represents: when the officer’s interests are directed towards him/herself rather than toward finding the best financial aid solution for the student, it is wrong.
Solutions
There have been calls for increased regulation of the student loan industry, but so far I have not read very much about best practices in the student loan industry.
When marketing to prospective students, we have found that leveraging rich content reduces many of the problems with “incentives” that arise in education marketing. Providing the individual with the means to make an educated decision may be more expensive in terms of marketing, but this method ensures that the student is genuinely interested in the product that is being offered, rather than being coerced into making a decision.
The outcome of Cuomo’s investigation may very well force student loan companies to spend more money on marketing, and make their services more accessible to the individual student.
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