Schools across the country might be under fire due to unethical agreements with credit-card companies, but it looks like Penn is in the clear.
New York Attorney General Andrew Cuomo - known for his 2007 investigation of the student loan industry - is examining the questionable business relationships between credit-card companies and several colleges.
Cuomo alleges that some colleges make agreements with credit-card companies that provide the school with a 'kickback' for each customer that applies for the card. Such agreements create a conflict of interest since the academic institution might illegitimately promote the card to their students to get the 'kickback' benefit, leading students to make misinformed financial decisions.
He recently sent subpoenas to several schools, including Brown University and Dartmouth College, asking for the specifics of their credit-card partnerships.
Penn has not been investigated nor received a subpoena, according to Business Services spokeswoman Barbara Lea-Kruger.
Though the University has several banking relationships - like its affiliation with PNC - its only credit-card partnership is with the Bank of America.
This Bank of America "affinity" credit card, which sports the Penn logo as well as a photo of the Quadrangle, is available to anyone affiliated with Penn, but is mostly used by alumni. Bank of America contributes money toward Penn student and alumni programming for every account opened and every purchase made.
"The agreement is designed to provide a credit card program for our community that benefits both the community and Penn," Lea-Kruger said. She added the University discloses the benefit it receives with every business partnership in order to avoid any conflict of interest issues.
University President Amy Gutmann said that, for this reason, it is unlikely that Cuomo's investigations will affect Penn.
"We've done it in a way that's totally transparent," she said.
She added that the University has taken steps to ensure that the Bank of America agreement is in full compliance with the law.
University Finance Officials confirmed the legal compliance when the agreement was originally drafted and again, more recently, in light of Cuomo's investigations.
Last year, the student-loan investigations launched by Cuomo revealed that Citibank - Penn's 'preferred lender' - paid the University a cut of the loan value for certain loans given to Penn students. In light of this discovery, Penn agreed to repay student borrowers and discontinue the agreement after a settlement was reached.
According to The Chronicle of Higher Education, Cuomo's current investigations will look into a variety of business relationships that colleges have, including those with health-insurance providers, textbook suppliers, and food services .
Representatives at Cuomo's office would not comment on the issue.Comments powered by Disqus
Please note All comments are eligible for publication in The Daily Pennsylvanian.