Questionable Financial Aid Practice (But Not at Marquette)
As part of his office’s continuing investigation of 100 colleges and a half-dozen private student loan providers, New York Attorney General Andrew Cuomo charged yesterday that “deceptive practices” carried out by colleges and student loan providers have been taking advantage of students.It’s too early to get exercised over this, since details are scarce, and American politics has a long history of politically ambitious Attorneys General looking for scapegoats to attack.
The “most obvious and egregious scheme,” Cuomo said in an interview yesterday, involved some schools receiving payment from lenders on their “preferred lender” list based on the loan volume.
“The more students a lender gets, the more the school receives in payment. You can call it a commission, you can call it a kickback,” Cuomo said. “Also, the fewer lenders the school lists as preferred, the more a school will get.” He said if a commission is paid and undisclosed “then it’s deceptive” practice and illegal.”
Cuomo said that the 100 colleges being looked at “are public and private, the big schools, the small schools and some of the highest ranking.” But he would not name them because the investigation is continuing.
The tobacco companies immediately come to mind.
Still, we thought it worthwhile to inquire as to whether Marquette does this. Spokeswoman Brigid Miller gave us the following response:
No - that situation is not at all the case at Marquette. For one, the university participates in the Federal Direct Loan Program. This means that for our students with federal loans (Perkins, Stafford, etc.), the funds are borrowed directly from the U.S. Department of Education, which lends the money to the student or parent through the college or university. No private lender is involved.Marquette has been known to engage in questionable practices in some areas (cooking reported SAT and ACT scores of entering Freshmen, for example).
For the most part, the only private lenders our students deal with are for what is called alternative educational loans, which are funds that are still required after scholarships, federal and state loans, grants and work study are exhausted. In order to benefit our students and their families, Marquette does maintain a list of preferred lenders for this type of loan, but there is no financial arrangement whatsoever between the university and the lender for that designation. Marquette selected them based only upon their record of favorable rates, customer service and loan terms that best meet the needs of our students. The students are still free to chose whatever lender they like for this alternative educational loan.
But happily, not this questionable practice.
Syracuse University and Drexel University are among institutions getting kickbacks from “preferred lender” arrangements.
And in a variation of the theme, financial aid officials from New York University got a trip to the golf resort in Pebble Beach, California.