In the wake of an investigation into unethical practices in the student loan industry, local universities have performed extensive reviews of internal controls to prevent kick backs and conflicts of interest between school officials and lenders.
Johns Hopkins University is the only local school directly implicated in the scandal. In response to inquires from New York Attorney General Andrew Cuomo’s office, the school suspended financial aid director Ellen Frishberg for receiving $65,000 from CIT Group, the parent company of Student Loan Express.
The school also adopted a code of conduct offered by Cuomo that forbids school employees from receiving anything from lenders and cancels preferred lender lists.
Student loans are an $85 billion dollar per year business. Cuomo and Democrats on Capitol Hill have criticized the Bush administration for lax oversight of the industry and called for tighter controls in a House hearing Wednesday.
Other local schools have not been named in Cuomo’s investigation. After news broke of problems in the industry, however, each took steps to insure there were no improprieties in their lending processes.
“We’ve taken a look and reviewed … how we describe our information and policies to our students,” American University spokeswoman Maralee Csellar said. “We’re in compliance with the recommendations from Cuomo’s office.”
George Washington University spokeswoman Tracy Schario said the university began a review of its policies after Cuomo’s investigation was made public.
“We didn’t uncover anything we were concerned about,” she said. “Revenue sharing and finders fees are not something we engage in.”
Schario said the university does maintain a list of preferred lenders, but does not receive any compensation from those on the list.
University of Maryland, College Park, Financial Aid Director Sarah Bauder said preferred lists are necessary to help students and families make informed decisions on how to borrow from.
She said Maryland’s probe revealed nothing improper.
Preferred lender lists “are to the benefit of the student,” she said. “There are 3,167 lenders and it’s a complicated process.”
