State seeks details of student loan deals

California Atty. Gen. Jerry Brown jumped into the burgeoning student loan scandal Tuesday by demanding that two finance companies turn over details of their business deals with state colleges and universities.

Brown said he sent letters to San Francisco-based Education Finance Partners Inc. and San Diego-based Student Loan Xpress to determine if the lenders made unlawful payments to the institutions.

“Schools and universities in California must be above reproach, and no further burdens should be visited upon students who are already weighed down by escalating student-debt responsibilities,” Brown said in a statement.

Officials with Education Finance Partners and Student Loan Xpress did not return telephone calls seeking comment.

New York Atty. Gen. Andrew Cuomo in February launched the initial probe of the $85-billion student loan industry and so-called preferred lender lists colleges give to students.

Cuomo’s office is investigating the financial relationship between at least 100 colleges and 13 lenders. Three other lenders have agreed to change their business practices and paid a combined $6.5 million to end probes of their activities.

On Monday, Cuomo announced a $2.5-million settlement with Education Finance Partners. He previously extracted settlements of $2 million each from Sallie Mae and Citibank.

CIT group, which acquired Student Loan Xpress in 2005, placed the subsidiary’s top three executives on administrative leave last week because of Cuomo’s investigation.

Earlier, Cuomo’s office found that loan officers at USC, Columbia University and the University of Texas had stock in CIT when Student Loan Xpress was a lender on the schools’ preferred lists.

Brown didn’t send any requests for information to schools.

Cuomo led a conference call with attorney general representatives from 40 states Tuesday urging a coordinated, nationwide probe.

Congress also has called for a hearing into the matter.