Columbia University denied breaking student-loan laws but agreed to pay more than $1 million into an education fund in an agreement stemming from state Attorney General Andrew Cuomo's effort to reform the student loan industry.
Columbia said in a statement that it "does not admit, and expressly denies, that it has violated any law in connection with its student loan practices."
Under the agreement, announced Thursday, both Columbia and the National Association of Student Financial Aid Administrators will adopt codes of conduct that ban such practices as lender gifts to college financial aid officers. Both also will be monitored by Cuomo's office for five years.
The move came after Columbia dismissed David Charlow, an associate dean of student affairs. He had previously been suspended because of his ties to the loan company Student Loan Xpress Inc. The university said Charlow's actions violated its conflict of interest policy, but no students were adversely affected.
Cuomo said Columbia officials acted promptly to remedy the situation once they were made aware of it. "They took quick action, they were cooperative and the result will be better for all involved," he said.
In his probe of the $85 billion college loan industry, Cuomo has said he found cases of colleges getting kickbacks from lenders granted preferred status by the schools. And, according to Cuomo, some college loan officers have received trips to luxury resorts and gifts from lenders.
NASFAA President Dallas Martin, who joined Cuomo in the attorney general's Manhattan office Thursday, said he reacted defensively when Cuomo first questioned his members' integrity.
"Today I want to apologize to him as I've done previously, but personally today, to say that I was wrong," he said. "We didn't have all the facts."
Under the code of conduct to which NASFAA agreed, gifts from lenders to college financial aid officers worth more than $10 will be banned. Martin said that "wining and dining" of financial aid officers by lenders at his organization's annual convention will no longer be tolerated.
"I still think that there's a fairly small number of individuals that have actually, really stepped across the line," he said. "I'm not saying a lot of people have not been close to the line, but they haven't really violated the truth."
While the agreement is not binding on individual NASFAA members, Martin said he expected them to comply.
Earlier this week, San Francisco-based Wells Fargo agreed to abide by Cuomo's code of conduct. Wells Fargo is among the nation's five largest lenders to agree to abide by the code.
Cuomo previously reached agreements with Citibank, Sallie Mae, JP Morgan Chase, and Bank of America. There were also agreements with Education Finance Partners (EFP) and CIT, which is now the parent company of Student Loan Xpress. Sallie Mae, Citibank, EFP, and CIT also agreed to contribute $9.5 million to a national fund to educate high school students and their families about the college aid process.
The $1.1 million Columbia agreed to pay will go into the fund as well.
Cuomo's probe includes more than 100 schools. He said more than 25 colleges _ including St. John's University, Fordham University and Long Island University _ have reached settlements with his office.
In Washington on Thursday, U.S. Rep. George Miller, D-Calif., announced that the Federal Trade Commission has begun an inquiry into "the unfair and deceptive practices that lenders use to market their products and services to students."
Miller said the FTC has begun to look into whether lenders' marketing tactics violate consumer fraud and abuse and debt collection laws.Labels: financial aid, free education, high school, scholarship, student loans, study abroad |
