The Greed and Corruption That Ate My Alma Mater

If Spellings and Chuck Miller are unsuccessful in their bid to destroy liberal arts learning by turning American universities into corporate voc-ed programs, there is yet another threat to the university that will be much harder to eradicate. Last week the Times reported that schools like Texas Tech have outsourced their student financial aid advice lines to Nelnet, whose greed and corruption are well documented by ED's own Office of Inspector General. Talk about the fox in the henhouse. Wow!

If it were not for people like Spitzer and Cuomo who have decided that there is political hay to be reaped by doing good work rather than evil, we would still be in the dark about the cozy connections between the student loan industry and university administrations. Here is the latest from Inside Higher Ed, whose reporting shows that the Chronicle has some real competition--and no pay-to-read firewall:

With New York Attorney General Andrew M. Cuomo threatening legal action against them, an undetermined number of colleges and universities have signed settlement agreements in which they commit to changing their student loan practices and, in some cases, repaying disputed funds they received from lenders in the form of what Cuomo calls “kickbacks.”

How many colleges and universities received the attorney general’s settlement offers and how many signed them is unclear; on Friday, as news of the settlement discussions emerged, Cuomo’s press secretary, John Milgram, said only that the attorney general’s investigation into the student loan industry is “continuing and expanding,” and that “if and when there are settlement discussions, we wouldn’t be discussing them” until they are finalized. He said he could not confirm an assertion by one source familiar with the investigation that the attorney general planned to announce settlements as early as today.

But several colleges in New York (including Pace University) and in other states (including Clemson University and the University of Mississippi) acknowledged having received settlement offers and/or discussing possible settlements with the attorney general’s office. And officials at at least one institution, Long Island University, said they late Friday that they had signed an agreement.

Robert N. Altholz, vice president for finance at Long Island, said Friday afternoon that officials there had received a proposed agreement just that day, and “been told we need to sign this by the end of the day today.” He declined to disclose the terms of the settlement document, citing a confidentiality clause, but said that in deliberations Friday, officials considered whether the monetary demands were comparable in scale to the $2,400 the university had obtained from its “revenue share agreement” with Education Finance Partners, as well as the reasonableness of the attorney general’s requests regarding the institution’s future relations with lenders.

Late Friday evening, Altholz sent an e-mail to a reporter confirming that the institution had signed the agreement and returned it to the attorney general’s office that by day’s end.

The settlement offers represented Cuomo’s first direct effort to hold colleges accountable for their role in what the attorney general, in announcing plans last month to sue Education Finance Partners for allegedly offering “cash kickbacks in exchange for business,” called an “unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest.” In that way, his action against the colleges seems like an expansion of his campaign to reform the student loan industry.

Even so, the idea that Cuomo would take aim at colleges can’t be seen as a surprise: In the public pronouncement of his lawsuit against Education Finance, Cuomo went out of his way to mention numerous colleges as having received the disputed funds from the lender. . . .