"A child's learning is the function more of the characteristics of his classmates than those of the teacher." James Coleman, 1972

Thursday, April 05, 2007

College Top Tier in the Bottom of Student Loan Corruption Barrel

The New York Times continues its reporting on Cuomo's investigations of student loan corruption behind the ivy-covered walls:

The directors of financial aid at Columbia University, the University of Texas at Austin and the University of Southern California held shares in a student loan company that each of the universities recommends to student borrowers, and in at least two cases profited handsomely.

The personal stake of the three university officials in the company, now known as Student Loan Xpress, is the latest revelation in an expanding investigation by Attorney General Andrew M. Cuomo of New York into the relationships between student loan companies and universities. Student Loan Xpress is one of the “preferred lenders” recommended at all three universities.

Government filings show that the three officials sold shares in a stock offering by the parent company of Student Loan Xpress in 2003 and held additional stock options in the company, known as Education Lending Group. One of the officials made more than $100,000, according to documents and lawyers in Mr. Cuomo’s office. In one case, that of Texas, the official says he was invited to invest in the company.

The documents show the largest gains went to David Charlow, executive director of financial aid at Columbia University. Columbia said yesterday that it had put Mr. Charlow on paid leave “pending a full review.” . . . .

If banks were submitting blind bids for the billions in student loans, rather than being guaranteed a fixed amount of profit by Congress (thank you, Mr. Boehner), this kind of corruption could be eliminated because the lowest bid would recommend themselves for the business. See earlier Washington Post story on the idea.

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