Two local universities have connections to a private financial aid company that's currently under investigation for paying kickbacks to student loan officers in other states.
New York Attorney General Andrew Cuomo is investigating Student Loan Xpress, a company that offers financial aid to college students. The company paid consulting fees to a student loan officer at Johns Hopkins University and also paid consulting fees to officials at two other colleges.
Cuomo is looking into whether that money was paid in exchange for being listed as a "preferred lender" at the school. This list is often used by students as they review financial aid options.
High Point University and Wake Forest University Baptist Medical Center both have had relationships with Student Loan Xpress. And while officials at both schools say none of their employees received any money from the company in exchange for being called a "preferred lender," they have opposite reactions to the ongoing investigation.
At High Point University, financial aid employees work with six different lenders, including Student Loan Xpress, Campus Door, Nellie Mae, Education Finance Partners, Chase and Nelnet. Director of communications Kay Meekins declined our request for an on-camera interview, but sent WFMY News 2 a written statement.
"We do not consider any of the lenders on the list 'preferred' lenders. We will continue to work with all these lenders until which time there is reason not to work with them anymore. Currently, no such determination has been made. If the recent rulings by the Attorney General mandate that information is communicated differently to students, High Point University will be happy to comply," Meekins wrote.
Meekins says "no staff member at HPU has received compensation of any form from Student Loan Xpress or its affiliates."
Meanwhile, Wake Forest University Baptist Medical Center has distanced itself from Student Loan Xpress. Spokesman Mark Wright also declined our requests for an on-camera interview, but provided an e-mail response to our questions.
"For all loan organizations that we list for our students, we send a questionnaire to the companies to learn about how they do business and what their service policies are. The company [Student Loan Xpress] had been on our list year before last. But last school year they failed to answer the questions to our satisfaction and we did not list them. This school year, however, they did answer the questionnaire satisfactorily and they were back on the list for a while. But when this issue came up we removed them, and as I understand it, that's the current status," Wright wrote to News 2.
Wright says no staff members or former staff members received any money or paid travel from Student Loan Xpress. In fact, he says few students utilized the company.
"Wake Forest University School of Medicine removed them because of concerns about their business practices raised in the investigation," Wright says.
Liz Solazzo, director of financial aid at Alamance Community College, says all students should read the fine print of any private loan carefully and ask lots of questions.
"Once you accept a loan, you've taken out a loan and schools make that easy to have happen," Solazzo says. "So my warning would be make sure you know what you're receiving and like you said, buyer beware."
The student loan investigation also prompted a U.S. Senate investigation. That led to revelations that a University of Texas financial aid officer who was fired last month expected meals and parties from lenders who did business with students at the school.
The Senate report released last Thursday quotes an internal Bank of America e-mail about Lawrence Burt as saying, "Larry loves tequila and wine. Since becoming director at UT Austin, he has not had to buy any tequila or wine. Lenders provide this to him on a regular basis."
Burt, the former director of financial aid services at the university, also demanded favors from Citibank, and when the bank refused he dropped Citibank from the school's preferred list, the report found. Citibank then invited Burt to serve on an advisory board, treated him to golf outings and expensive meals, eventually getting back on the preferred list, the report stated.
The university fired Burt last month after determining his ownership of stock in a loan company violated university rules. A woman who answered the phone at Burt's home said he was not immediately available Thursday.
The report, released by Sen. Edward Kennedy, (D) Massachusetts, bolstered the findings of New York's attorney general that there are widespread conflicts of interest in the $85 billion-a-year student loan industry.
Kennedy found many instances in which banks gave student aid officials trips, tickets to sporting events and other gifts. Ellen Frishberg, the former financial aid director at Johns Hopkins University, received payments from several lenders, according to investigations by Kennedy and Cuomo.
Kennedy's report cites a newly disclosed e-mail in which Frishberg wrote an official with Student Loan Xpress asking for personal tuition assistance for a doctoral program she wished to pursue.
"I am searching for half tuition support. Know any good scholarship programs? Or, why don't you put me on retainer to EdLending?" she wrote. EdLending is the parent company of Student Loan Xpress.
Shortly afterward, the Student Loan Xpress official sent Frishberg an e-mail saying she would get a consulting job that would help with tuition. No documents were provided to investigators showing any consulting work was ever done in exchange, according to the Senate report.
Frishberg resigned last month after the university found she failed to comply with its ethics rules.
In Los Angeles, the University of Southern California's financial aid director retired, two months after she was placed on paid leave because of her alleged dealings with a lender recommended to students.
Catherine Thomas, who held the USC job since 1990, had become the subject of Cuomo's investigation into whether financial aid officers obtained discounted stock and other inducements to steer students to certain lenders.
The university said in a statement that Thomas' actions "in connection with the student loan company Student Loan Xpress were inconsistent with USC's conflict-of-interest policy."Labels: academy awards, career training, education online, financial aid, free college, free education, high school, scholarship, student loans, study abroad |
