One student loan company took university financial aid directors on a junket to Disney World. Another paid $500 to be placed on a school’s list of recommended lenders. And others showered tequila, wine and golf outings on college aid officers.

Those were among what Senate investigators called illegal enticements from loan companies to university officials to drum up business, according to a nearly 600-page report issued yesterday. The report offers the most detailed evidence yet that lenders offered perks to colleges with the explicit goal of persuading schools to steer students their way. Some employees described the arrangements as quid pro quos.

The revelations came as Johns Hopkins University agreed to pay about $1.13 million to settle an investigation by New York Attorney General Andrew M. Cuomo (D) into the school’s financial aid operation. Previously released documents from the Senate investigation show that former university aid director Ellen Frishberg accepted more than $130,000 from eight lending industry companies during her tenure.

Johns Hopkins, which has denied wrongdoing, agreed in the settlement to have its financial aid practices monitored for five years by the attorneys general of New York and Maryland.

Frishberg is the focus of a criminal and civil investigation by Cuomo’s office. The review could result in charges of fraud, bribery, conspiracy or all three, according to people with knowledge of the matter who spoke on condition of anonymity because the investigation is ongoing. Frishberg did not return calls seeking comment.

The Senate findings are the latest disclosure of questionable financial arrangements between lenders, universities and regulators in the $85 billion-a-year student loan industry.

“This investigative report demonstrates that inappropriate marketing practices, conflicts of interest, and back-room deals are found all too frequently in the student loan industry,” Sen. Edward M. Kennedy (D-Mass.), chairman of the education committee, which conducted the investigation, said in a statement. “The findings underscore the urgent need for systemic reform in the student loan system.”

Congress is considering legislation to tighten restrictions on relationships between schools and lenders, increase federal aid for students and cut subsidies for lenders. The House education committee approved a bill this week that would increase student aid by about $18 billion, and the Senate panel is expected to take up a similar measure Wednesday.

In the Senate report, investigators revealed that Citizens Bank paid $41,645 to hold a meeting in Disney World for members of its advisory board in February 2006. The event included tours of the park, rounds of golf and a $4,100 dinner at an upscale restaurant. It found that Citizens was one of many lenders that used advisory boards, which frequently include university aid officers, as a way to increase business. The bank said yesterday that future meetings will be held via teleconference.

Another lender with a similar strategy, the report found, was Citibank. An internal bank document about the University of Texas at Austin said a key company tactic was to “gain lender list inclusion by inviting DFA [director of financial aid] to become member of Citibank’s” advisory board. That director, Lawrence Burt, who was recently fired from his position, did join the board, and Citibank was added to the lender list for 2006, becoming the fifth-largest lender at the school that year. A Citibank spokesman declined to comment on the report.

At Texas Tech University, loan companies were told in 2005 that they could be listed as a preferred lender on the school’s Web site if they paid $500, according to a school letter obtained by investigators. The school said in a statement yesterday that the fee was for an advertising opportunity and that the university does not accept money for placement on its lender list.

Northstar, a lender that paid $500 to appear on the Texas Tech Web site list, was also asked by another university to donate office equipment, which the company considered doing as a way to increase loan volume, the report found.

“Maybe there is ‘opportunity’ for us to get into the school with a presentation (quid pro quo),” a Northstar supervisor wrote in an e-mail this year.

Jamie Wolfe, the company’s chief financial officer, said Northstar had not done anything wrong.

“The whole business world revolves around quid pro quo,” he said in a phone interview. “This is just the normal course of business.”

Information from: www.washingtonpost.com

This entry was posted by Taman Siswa on Friday, June 15, 2007 at 10:25 pm and is filed under Education News, Student Loan. Tags: College, Education News, Financial Aid, Student, Student Loan, . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.