Those who work in financial aid offices in Kansas universities welcome the news that the Kansas Attorney General's Office is studying student-lending practices after reports of kickbacks uncovered nationwide.
"There shouldn't be any surprises anywhere down the line, and nothing that should concern anybody," said Kansas University spokesman Todd Cohen.
The $87 billion student-lending industry has been the target of prosecutors this year following allegations that schools have received compensation to steer students to particular lenders, even if it's not in the student's best financial interests.
Cohen said he was aware of the inquiry but that KU hadn't yet received any formal request for information from Attorney General Paul Morrison's office.
Cohen reiterated that KU doesn't have any "preferred lenders" and participates in the federal direct-lending program, in which students get loans directly from the federal government.
Howard Fischer, the financial aid director at Ottawa University, said he believes the controversy has been overblown.
"In any industry the size of the student-lending industry, there are going to be a small percentage of individuals who are going to make some bad decisions," he said.
Every Christmas, packages of candy show up at Ottawa University's financial aid office, compliments of student-lending companies. A couple times per year, lenders bring in lunch for the financial aid staff and talk about their companies and their loan products.
"The lenders do normal marketing," he said.
But Fischer said that's as cozy as the relationships get.
Fischer said his school does not get any financial benefits if students choose a particular lender, with one exception: The school recently set up what's called a "school as lender" agreement for graduate and professional Stafford loans, in which the university makes the loan to the student, sells it to a private lender, then recaptures a portion of that money to use for need-based financial aid.
"We're not marketing the program any differently than we do anything else," he said.
The private lender Ottawa University contracts with for that program, Student Loan XPress, recently reached a $3 million settlement with New York Attorney General Andrew Cuomo after an investigation that found the company's former chief executive officer sold or transferred securities to college financial aid officers and to a U.S. Department of Education official.
"Student Loan Xpress has gotten into trouble for doing some things that they shouldn't have done," Fischer said. "I don't think anyone used good judgment. I think greed got in the way of that."
Fischer said he chose the company because he needed to set up a "school as lender" system quickly given a federal deadline, and it was the fastest. The company also is one of seven private lenders that appear on the university's Web site as preferred lenders for Stafford loans.
The list changes each time someone calls up the site so that one lender isn't always at the top of the list. The site also includes a disclaimer for students to do their homework about rates and fees.
"We don't steer students to lenders," Fischer said.
At Baker University, students who apply for financial aid online see a list of four preferred lenders, including Baldwin State Bank. Financial aid director Jeanne Mott said the school chooses "preferred" lenders based on the service they think students will receive.
"We don't get free trips. I don't serve on any boards with pay - none of the things that are the real hot topics that you're hearing on the East Coast are true at Baker University," Mott said.