Nova has revenue-sharing agreement with student loan provider
By Kimberly Miller
Palm Beach Post Staff Writer
Tuesday, June 19, 2007
Nova Southeastern University, the largest private college in Florida, has a revenue sharing agreement with one of its preferred student loan providers and contracts with the company to staff its student call centers, according to papers released today by the state.
Florida Attorney General Bill McCollum opened an investigation last month into how student loan providers get on schools' preferred lender lists and other questionable practices following a national inquiry spearheaded by the New York State Attorney General's Office.
McCollum and New York's Andrew Cuomo held a news conference this afternoon asking the U.S. Senate to support the national Student Loan Sunshine Act, which the duo said would protect students from quid pro quo arrangements between schools and lenders.
Cuomo said 32 attorney generals nationwide signed a letter of support. The U.S. House of Representatives passed the legislation last month.
"We are urging them to pass a law that would stop on a national basis the student loan scandals that we have found across the country," Cuomo said. "The level of abuse has surprised everyone."
While McCollum said Florida's transgressions were less severe than what was found in other areas of the country, he is supporting the legislation and working on a university code of conduct with Florida's Board of Governors - the public university oversight board.
Several universities nationwide have already signed Cuomo's "College Loan Code of Conduct," which prevents colleges from receiving anything of value to put a lender on a preferred list. Schools also are prohibited from steering students to certain lenders, and lenders are not allowed to have employees work in school financial aid call centers.
A handful of schools have also agreed to refund students money they received from lenders for loan business.
The 26,000-student Nova Southeastern University is the only Florida school to be questioned by McCollum and receive a subpoena from New York.
Nova is also the only Florida university in the top 10 U.S. News & World Report rankings for student debt with 62 percent of graduates carrying an average $26,658 in school loan debt.
Nova attorney Thomas Panza said he believes New York targeted Nova because of the number of students who take out loans for its graduate and professional programs.
Panza said school officials are willing to sign a code of conduct, and plan to terminate the contract with loan company Sallie Mae where its employees work in Nova's student loan call center.
Panza downplayed the revenue sharing agreement where students can extend their loan payments for a fee that is divided between Sallie Mae and Nova.
"That practice is such a small thing," Panza said. "It's very few students. Nova isn't doing anything wrong."