In 2007 Sallie Mae settled with the New York attorney general’s office for paying colleges to promote it loans and was forced to donate $2 million to fund a program that educates students about loan options. In another settlement Citibank and six universities agreed to return the funds the schools received from revenue-sharing arrangements with private lenders and end sharing practices.

Further the Securities and Exchange Commission has questioned Student Loan Xpress and Columbia University, the University of Southern California, and the University of Texas–Austin, and a U.S. Department of Education official in violating securities law. In exchange for stock officials listed Student Loan Express as a “preferred lender.” Student Loan Xpress’s market share of Columbia student debt surged from 5.1 percent in 2002 to 12.17 percent in 2006, one Senate aide said.

There are a number of student loan defenses such as disability that may cause the debt to be discharged not by Bankruptcy but directly by the Department of Education itself.

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