University Settles Student Loan Case

[Jun 29, 2007.]

Columbia University has agreed to a settlement in connection with its role in a nationwide student loan scandal.

The university will pay $1.1 million to a fund which will teach students about loans. It will also revamp its student loan program and will be monitored for the next five years by the New York State Attorney General. Investigators found that the financial aid director for Columbia’s undergraduate college and engineering school promoted a student loan firm in which he was a shareholder.

The New York attorney general stated, “A school is not just a school. It is also a corporation. And as a corporation it is responsible for the oversight of its employees.” The AG, however, did praise the university for its efforts to reform its financial aid processes. Columbia will be centralizing its oversight of all financial aid operations within its schools. Meanwhile, the investigation into Columbia’s student loan practices will continue.

There are indications that other universities may face similar ethical quandaries. For instance, financial aid officers at the University of Texas at Austin and the University of Southern California owned shares of the Education Lending Group as well. In addition, the financial aid director at Johns Hopkins University received approximately $65,000 in fees and tuition payments from the student loan firm.

Meanwhile, a statement released by Columbia University said, “We regret that a longtime, well-regarded employee failed to uphold the trust that had been placed in him by the university and did not conform to standards that are commonplace in universities and business. The reforms now in place as a result of our combined efforts will make this kind of conduct a thing of the past.”

Columbia University officials also noted that their agreement with the attorney general “specifically states that Columbia University does not admit, and expressly denies, that it has violated any law in connection with its student loan practices.”

Julie Ann Amos
June 29th 2007

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