The College Board, the nonprofit group best known for administering the SAT college admissions test, agreed Monday to settle state investigations into its student loans. The New York group is to invest $675,000 to develop tools to help identify the lowest-cost student loan options. Probes by the attorneys general of New York and Connecticut found that the organization discounted products and services related to financial aid for colleges that agreed to place its loans on their "preferred lender" lists.
The College Board said in August it would not accept loan applications after Oct. 15, citing new conflict-of-interest rules among lenders and school officials. As part of Monday's agreement, the organization said it would abide by the new rules if it started lending again.
"Our investigation of the student lending industry revealed arrangements — concealed from students and families — between the College Board and financial-aid offices at several schools," Connecticut Attorney General Richard Blumenthal said. New York Attorney General Andrew Cuomo joined the settlement.
U.S. and state probes into the $85 billion-a-year student loan industry have found that lenders gave colleges and financial-aid officers payments and perks. At least 19 lenders and 26 colleges and universities agreed to cut financial ties and abide by a code of conduct that forbids acceptance of gifts or payments from lenders.
