Palm Beach Post
End gouging of students
Tuesday, June 26, 2007
That scheme that let students at Nova Southeastern University in Broward County extend their loan payments for a fee divided between the lender and the school? The kickbacks are "such a small thing," involve "very few students," and "Nova isn't doing anything wrong," said attorney Thomas Panza.
Oh, and Nova plans to terminate a contract that let employees of Sallie Mae - the self-described "leading provider of student loans" - work in Nova's student loan call center. And university officials are willing to sign a code of conduct.
Mr. Panza can't finesse what may be the worst example in Florida thus far of the nationwide loan-gouging. In other states, financial aid officials were receiving as much as $100,000 in stock, or vacations and other perks, for steering students to certain loan companies, while failing to disclose their interest.
So, students incurring predatory debt financed companies that paid to get on preferred-lender lists. University officials were complicit. So were universities. Given that example, what else did the schools expect from their employees? The proposed code of conduct for the state's public university system is the least Florida can do, but it's not enough. How would the policy affect private colleges such as Nova Southeastern, the largest in Florida?
Florida Attorney General Bill McCollum has joined the New York state investigation that first spotlighted the problem. One result is the Student Loan Sunshine Act in Congress that would protect students from such arrangements between schools and lenders. "The level of abuse," New York Attorney General Andrew Cuomo said, "has surprised everyone."
On Wednesday, the Senate is to revisit the bill. It would require private lenders to disclose financial relationships with colleges. After the House passed its version last month, lobbyists representing the for-profit companies in the $85 billion student-loan industry argued that the free market can serve students better than the Federal Direct Loan Program. In fact, the record shows that the private lenders care more about serving themselves.
No university, and no university financial aid employee, should have any relationship with a private student loan company. Making that law would not be a small thing.
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