Nelnet to settle with NY officials

Nelnet to settle with NY officials

	Published : Tue, 31 Jul 2007 17:38 By : Agencies Print this Story

OMAHA, Neb. (AP) - Leading student loan company Nelnet Inc. agreed Tuesday to pay $2 million and further reform its practices as part of a settlement with the New York Attorney General's Office.

Officials at the Lincoln, Neb.-based company disclosed the settlement during a conference call with financial analysts Tuesday. Nelnet also agreed to abide by an industry code of conduct developed by New York Attorney General Andrew Cuomo.

The new code of conduct is similar to one Nelnet announced in April, but adds prohibitions of two services Nelnet has offered: loan consolidation service agreements with alumni associations and answering financial aid questions on behalf of universities.

Earlier this month Nelnet announced plans to end agreements with 110 alumni groups by mid-August and stop paying the groups for using member lists. Nelnet president Jeff Noordhoek said Tuesday the company is looking for a buyer for its phone service that handled financial aid questions.

Universities have paid Nelnet to respond to financial aid inquiries from students. If borrowers or potential borrowers ask questions about loans, Nelnet employees will transfer the call back to the school's financial aid office to avoid any conflict of interest.

New York's Cuomo has led an investigation into conflicts of interest in the student loan industry. He has announced settlements with 11 other lenders, including Citibank, Sallie Mae, JP Morgan Chase, and Bank of America.

The fines other companies have paid have gone into a fund to educate students about financial aid.

In April, Nelnet acknowledged it made have ry small' mistakes in some dealings with colleges. The company paid $4,800 to Western Illinois University for referring students to the company for private loans and gave two financial aid officers at an unidentified school in Albany, N.Y., plane tickets to travel to New York City for a 'theater event,' the Nebraska attorney general's office said.