A black social worker is suing Columbia University and Citibank for allegedly colluding to charge him and his peers exorbitant interest rates on their student loans.
According to the New York Post, the 57-year-old graduated from Columbia in the 1990s with the help of a loan from Citibank, the school’s “preferred lender.” His original loan was $65,000, but it has ballooned to $172,000 since—and he hasn’t paid off any of the principal yet. Click here to read the story.
He joins New York Attorney General Andrew Cuomo, who has been investigating the lending practices of universities and colleges all year. In fact, since announcing the investigation in February, he has named 63 colleges and universities nationwide that he says have misled students signing up for student loans. Many of them have settled with the attorney general or are currently being sued. (To read the latest in Cuomo’s investigation, click here. To visit the N.Y. attorney general’s Web site, click here.)
We wouldn’t presume the social worker’s charges are true—these institutions are entitled to a presumption of innocence until proven otherwise. Still, for financial advisors these allegations should serve as a reminder that whatever you’re offering to clients as part of a financial solution—whether it’s a mortgage or a mutual fund—you better disclose any conflicts of interest, such as special arrangements or fees you’re receiving from the different vendors.