These proprietary analytic models and decision tools were positioned as a "human capital investment" approach to underwriting student loans.
In 2007, MyRichUncle ran a New York Times advertising campaign that publicized the practice of financial aid offices having relationships with student loan companies.
The New York Attorney General, Andrew M. Cuomo, launched an investigation into deceptive marketing practices in the student loan industry shortly thereafter,[1] the result of which was a marketing code of conduct that eight lenders (Campus Door, EduCap, GMAC Bank, Graduate Loan Associates, Nelnet, NextStudent, Xanthus Financial Services, and MyRichUncle) agreed to follow.
[2][3] In June 1999, Khan and Garg incorporated Iempower Inc., planning to enable investors to purchase an economic share of an individual's future income stream for a set amount of time.
[6] Further work by Nobel Laureates Gary Becker and James Tobin validated the concept and its applicability to education finance.
Iempower suffered a setback in 2001 when the company's offices, located on the 78th floor of 1 WTC, were destroyed in the September 11, 2001 attacks on the World Trade Center.
[12] Entry into the private student loan business, which was traditionally the mainstay of large banks and Sallie Mae, required the company to raise significant amounts of external capital.
[20] Embark provides online admissions applications and enrollment management services to colleges and universities, and to a number of other institutions, foundations, and scholarship and fellowship programs.
[24][25] [failed verification] In July 2008, MRU Holdings closed its second securitization, issuing $140 million in principal amount of asset-backed securities through Merrill Lynch, Goldman Sachs & Co. and BB&T Capital Markets.
In January 2007, New York Attorney General Andrew Cuomo began an investigation to uncover relationships between schools and lenders.
"[32][33] The following month, on April 4, 2007, the New York Attorney General released another statement: "We are seeing more and more suspicious practices and dealings between university officers and loan companies come to light.
However, between March and May 2007, a number of related stories made it to press, confirming MyRichUncle's allegations of systemic misconduct in the student loan industry.
[45] It contains guidelines and prohibitions regarding revenue sharing, gifts and trips, advisory board compensation, preferred lender lists, loan resale disclosures, and call center operations.