Settlement Reached in Student Loan Scandal

A financial scandal involving 22 student loan lenders and 26 colleges has now been settled out of court:

The College Board, the nonprofit group best known for administering college-admissions tests, agreed to settle state investigations into its student loans.

The New York-based group will invest $675,000 to develop tools to help identify the lowest-cost student-loan options, as part of the settlement. The probe by the attorneys general of New York and Connecticut found the organization discounted products and services related to financial aid for colleges that agreed to place its loans on their “preferred-lender” lists.

The College Board stopped accepting loan applications in October 2007, citing new conflict-of-interest rules among lenders and school officials. As part of today’s agreement, the organization said it would abide by the new rules if it started lending money again, the attorneys general said.

Source: Bloomberg