New York Attorney General Andrew Cuomo announced Wednesday that two more student lenders have agreed to abide by a code of conduct designed to protect students from questionable college lending practices.
JP Morgan Chase and Bank of America, which are both leading student lenders, have agreed to adopt the code of conduct, Cuomo said in a prepared statement for delivery to a hearing before the House Education and Labor Committee.
The code of conduct bans lenders from paying colleges in exchange for being designated a preferred lender. It also bans lenders from paying for trips for financial aid officers and other college officials. Lenders also cannot pay college employees to serve on advisory boards.
Sallie Mae and Citibank previously entered into agreements with Cuomo in which they said they would adopt the code. Some congressional lawmakers want to write it into law.
Cuomo said his investigators uncovered numerous arrangements that benefited schools and lenders at the expense of students. For example, investigators say lenders have provided trips for college financial aid officers who then steered students to the lenders.
Cuomo had criticized the Department of Education on Wednesday, saying it "has been remarkably weak in its oversight of the industry."
Education Secretary Margaret Spellings on Tuesday ordered a task force to come up with ideas for better regulating the student lending industry. She said the panel should look at inducements lenders give to colleges and preferred lender lists, in which colleges suggest certain lenders that students should consider using.