Financial aid probes heat up
It was a quiet summer on the financial aid investigations beat, but as reported in yesterday's Times, there was plenty going on behind the scenes.
Students at the University of Miami learned their school initiated Sallie Mae federal loans on their behalf, even though they never requested a loan or designated a lender. Experts say the school may have violated federal privacy laws, and the lender may have run afoul of the Higher Education Act.
But wait, there's more.
In its second report on student lending practices, a U.S. Senate committee run by Sen. Edward Kennedy, D-Mass., pointed to questionable activities at two of Florida's larger schools, Florida State University and Nova Southeastern.
Darryl Marshall, director of financial aid at FSU, was given tickets to The Players Championship (TPC) golf tournament, as well as a bunch of golf umbrellas, from lender Sun Trust in 2003.
According to company documents, the company was anxious to get the school's business in the lucrative federal school-as-lender program.
"Darryl advised that Sallie is getting ready to make a push for school as lender. He wanted to make sure we don't get left out of the running," the document said. "Moving ahead on this. Gave Darryl Nelnet's $5,000 scholarship. Gave him TPC tickets for his kids."
Readers may recall Marshall as one of the members of the Student Loan Xpress advisory board who wasn't implicated for accepting cash payments or holding company stock last spring. Half a dozen financial aid administrators -- including those at Columbia University, Johns Hopkins and the University of Texas -- were disciplined or fired for their behavior on the board.
Over at Nova Southeastern, Sallie Mae offered officials a deep discount on call center services as part of a 2005 loan pitch, charging the university $1.20 per call for services the lender valued at $4.40.
"Gap is $3.17 per call," Sallie Mae reported. "Calls excepted for 2006, 146,000. Cost to Sallie Mae, $460,000."
The company also offered a discount on federal loans in exchange for the university's endorsement of its consolidation loans.
"Sallie Mae is willing to provide NSU with an additional .05 percent premium on sales of Stafford loans in exchange for exclusive endorsement and promotion of SAllie Mae's loan consolidation program to NSU students," said a company document.
Under federal law, lenders are barred from offering "points, premiums, payments or other inducements" in exchange for federal loan volume.
-- Tom Marshall, Times staff writer