College students can rest a little easier tonight knowing that New York Attorney General Andrew Cuomo is looking out for them. On September ninth, eight student loan companies signed an agreement to abide by stricter marketing standards. Seven of those companies, Campus Door, EduCap, GMAC Bank, Graduate Loan Associates, Nelnet, NextStudent and Xanthus Financial Service, were a targeted by an investigation led by Cuomo to examine student lending practices. The eighth company, My Rich Uncle, thought that the guidelines were a great idea and volunteered to hold their company to the same standards.

In addition to questionable promotion techniques such as offering free iPods for students who signed up for loans, the loan companies were being investigated for kickback arrangements with school counselors, preferred lender lists published by the schools, and revenue sharing plans. The negative effect of these arrangements was that students were sold on loans that were not in their best interest by counselors they are supposed to be able to trust.

As a result of the signed agreement, these questionably and possibly illegal ties between student loan agencies and schools have been severed. In addition, the lending companies created a $1.4 million fund to teach students and their families about student loans. Six schools have also agreed to repay more than $3 million dollars to students for inflated loan prices due to revenue sharing agreements.

Hopefully the severing of ties between lender and school will allow some healthy competition in the student loan arena which would result in better rates for college students making college a little more affordable.

If you now have a renewed trust in America’s lending establishments and would like to give them a second chance, browse our list of schools to find a great online degree program. Then, if you need to, take out a conflict-of-interest-free loan courtesy of Andrew Cuomo.

Tags: Financial Aid