WASHINGTON — Rampant abuses by lenders have followed a boom in higher-priced college loans not guaranteed by the government, and lax federal oversight has made the situation worse, according to congressional testimony yesterday.

New York's attorney general, Andrew Cuomo, told Congress his office has begun investigating lenders for possible discriminatory practices — involving such criteria as where a student lives and what type of college he attends — in the pricing of student loans.

Already, his office has taken on conflict-of-interest cases such as kickbacks to college officials for steering students toward particular lenders.

Interest rates on private student loans are not capped, unlike most government-backed college loans.

The $17 billion market for private loans is "the fastest-growing segment of the student loan industry and (has) become the most fertile ground for unscrupulous practices," Cuomo said at a hearing of the Senate Banking, Housing and Urban Affairs Committee. "Private loans are the Wild West of the student loan industry."

At the same time, he said, "The Department of Education was asleep at the switch, but so were the banking regulators — who must now wake up and act."

The committee chairman, Sen. Christopher Dodd, said he would consider writing legislation to extend to student loans the sort of fair-lending laws that cover home mortgages.

The committee also will scrutinize the role of banking regulators in overseeing the private student loan industry, said Dodd, D-Conn.

"We need to examine this thoroughly and carefully," said Dodd, a 2008 presidential candidate. "Our country will pay an awful price indeed" if students are priced out of the market for college loans.

Sen. Richard Shelby of Alabama, the committee's senior Republican, said the committee must determine if stronger banking laws or penalties are needed to protect students.

On the House side, a bill aimed at curbing conflicts of interest and corrupt practices in college lending won approval last month.

It would ban gifts from lenders to schools and impose strict controls on schools that publish approved lender lists to guide students to certain loan companies.

Lenders and schools would have to make their business dealings more transparent to borrowers, disclosing terms, conditions and any incentives involved.

College tuition costs are soaring and private student loans are carrying rates as high as 20 percent.

Lawmakers are seeking to draw public attention to student lending issues the way they have spotlighted the distress over high-risk home mortgages in recent months.

Cuomo and congressional Democrats have criticized the Education Department for what they say is lax oversight of the student loan industry.

But at yesterday's hearing, Cuomo also blamed federal regulators with authority over lenders: the Federal Trade Commission, the Treasury Department's Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

All the actions taken by his office in the student loan investigation, which covers more than 100 schools, could have been taken by the regulators, Cuomo said.

He has secured settlements with Citibank, student lender Sallie Mae, JPMorgan Chase, Bank of America, Education Finance Partners, CIT (the parent of Student Loan Xpress) and 25 colleges.

Education Secretary Margaret Spellings has taken issue with Cuomo's criticisms.

"Not only are we not asleep at the switch, but we are very much at the helm and managing our business," Spellings said recently.

She noted that many of the abuses uncovered by Cuomo's investigation have been in the private student loan industry, over which her department has no jurisdiction.

In that case, the department should have referred suspected abuse by lenders to the banking regulators, Cuomo said yesterday.

Spokesmen for the comptroller's office had no immediate comment on Cuomo's remarks. Spokesmen for the Federal Trade Commission and the FDIC couldn't immediately be reached.