The State of New York announced plans yesterday to address the conflicts of interest in the student-loan industry, according to an online MSNBC report.
Lenders would be prohibited from offering financial benefits such as referral fees, gifts or trips to university employees.
The student-loan industry is an $85 billion empire.
Top New York legislators introduced their bill after Attorney General Andrew Cuomo performed an intense investigation of illegal kickbacks in the student-loan industry.
Penn voluntarily settled with Cuomo, agreeing to end its two-year revenue-sharing deal with Citibank.
In this deal, the University received a 2-percent fee from the bank for each Penn CitiAssist loan that a student took out.
Over $1.6 million was also redistributed to students participating in the program.
About two-thirds of college students in the United States take out loans to finance their education - 90 percent relying on the preferred lenders recommended by their respective schools.
