Attorney General's News Release

June 15, 2007

Amid student loan scandal, Nixon urges families to plan carefully when borrowing money for college

Jefferson City, Mo. — Attorney General Jay Nixon wants to remind parents and students of their rights when seeking loans to help pay for a higher education. The national student loan scandal has brought attention to the practices of colleges and lenders, and Nixon says borrowers need to beware of potential pitfalls.

When shopping for loans, Nixon offers these recommendations:

• You have the right to choose your lender. Most schools have a preferred lender list, but this is simply a recommendation. How you pay for college is up to you.
• Shop around for the best rates, lowest fees, incentives for better terms, such as making regular on-time payments. Loan offers and contracts are complex, so deciphering them may not be easy. Your school’s financial aid office can help.
• Beware of companies that charge fees to prepare your FAFSA (Free Application for Federal Student Aid) or other paperwork for you. FAFSA applications are free and simple for most students and parents to complete.
• Understand the terms of your loan - the interest rates, fixed or variable, fees, etc.
• After you’ve chosen a lender, watch for companies offering you what sounds like a better deal. These may sound good at first, but they often involve higher rates or hidden fees.
• When in doubt, consult your school’s financial aid staff, which can help you sort out legitimate offers from scams and bad deals.

“With the today’s high cost of college, getting financial aid has never been more important,” Nixon said. “Students and parents need to shop aggressively, have as much information as possible and understand their rights when navigating through this complicated process.”

Nixon recently reached an agreement with Washington University in St. Louis that establishes a code of conduct for the school. It forbids the school from receiving any financial incentive for encouraging students to borrow from certain lenders. Nixon’s office continues to investigate student lending practices and is working with lenders and schools statewide to ensure a fair marketplace for student borrowers.

Students and their parents can use a student loan calculator in the Consumer Corner section of Nixon’s Web site at ago.mo.gov. The calculator helps borrowers get a clear understanding of the amount they’ll borrow, interest rates, monthly payments and other factors.

Consumers can file complaints against a college or lender by calling Nixon’s Consumer Protection Hotline at 1-800-392-8222 or visiting ago.mo.gov.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Press Secretary.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818