Citibank and Columbia University Sued for Charging College Students Extremely High Interest Rates on School Loans

A former Columbia University student is suing Citibank and Columbia University for what he is calling “modern-day slavery,” for allegedly colluding to charge unreasonably high interest rates on student loans.

Brian Baxter, 57, is now a licensed psychotherapist and a social worker. He graduated from Columbia University in the 1990’s with a BA in sociology and a master’s in social work. Baxter says that he is still paying back the interest on his student loan even though it has been 10 years since he graduated.

He says that his $65,000 loan has turned into $172,000. Creditors take 15% of his paycheck regularly. Baxter says he will likely spend the rest of his life paying back his debt.

Baxter is accusing Columbia of guiding him toward Citibank, the school’s preferred lender and is calling the alleged collusion an act of “modern-day slavery.” He says he filed the lawsuit on behalf of all first-generation, low-income college students.

New York Attorney General Andrew Cuomo is investigating the lending practices of universities and colleges. So far, 63 U.S. colleges and universities have been named as having misled students who applied for student loans. Over 25 schools and at least 12 lenders have reached settlement agreements collectively valued at $13.7 million. Other lawsuits are pending. Students have been repaid $3.4 million.

Governor Cuomo is examining whether school officials received kickbacks for encouraging students to sign up with certain lenders. There is evidence that allegedly shows how schools, lenders, and financial officers benefited from certain arrangements that ended up costing students money. Some schools supposedly have a “preferred-lender” list, while others have exclusive “preferred-lender” deals. Other evidence revealed that some loan companies have school financial aid officers on their boards.

Shepherd Smith and Edwards represents clients who have been financially taken advantage of by a member of the securities industry. Faiilure to disclose conflicts of interest is inappropriate and wrong. Contact Shepherd Smith and Edwards and ask for your free consultation.

Related Web Resources:

Columbia and Citibank ‘Modern Day Slavers’ Suit, New York Post, December 17, 2007
Columbia U., Citibank sued for ‘slavery’, UPI.com, December 17, 2007
Cuomo: School loan corruption widespread, USA Today

New York State Attorney General Mario Cuomo