Yet another dirty story of kickbacks that you will not hear on TV any time soon. March 16, 2007, the Boston Globe  exposed a web of student loan corruption so intricate that even the nation’s largest student-loan provider SLM Corp. — commonly known as Sallie Mae found itself among the culprits - along with Nelnet Inc.; Education Finance Partners Inc.; EduCap Inc.; the College Board; and CIT Group Inc..

New York’s attorney general has accused colleges across the country of taking kickbacks from student loan companies and reaping other benefits while making it harder for students to get better deals on their loans.

New York Attorney General Andrew Cuomo said Thursday an investigation he began last month into the $85 billion student loan industry found numerous arrangements made to benefit schools and lenders over the students. In some cases, it found that lenders provided all-expense-paid trips for college financial aid officers to exotic locations in return for directing students to the lenders….

“There is an unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest,” Cuomo said. “The financial arrangements between lenders and these schools are filled with the potential for conflicts of interest. In some cases they may break the law.” …

 Here is how it works:

– Lenders pay kickbacks to schools based on a percentage of the loans directed to the lenders.

– Lenders foot the bills for all-expense-paid trips for financial aid officers to posh resorts and exotic locations. They also provide schools with other benefits like computer systems and put representatives from schools on their advisory boards to curry favor.

– Loan companies set up funds and credit lines for schools to use in exchange for putting the lenders on their preferred lender lists and offer large payments to schools to drop out of the direct federal loan program so that the lenders get more business.

With two-thirds of college students take out loans for college, we can easily bet that this collusion is extremely lucrative. There have been no criminal charges or civil lawsuits filed the article added