Archive for Wednesday, September 5, 2007

A.G.’s probe clears schools in loan case

September 5, 2007

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— Attorney General Paul Morrison said Tuesday he found no wrongdoing on the part of Kansas schools in the way they help students secure education loans.

But Morrison urged the schools to adopt a "code of conduct" that he said would prevent possible unethical practices in the future.

Morrison's conclusion of a three-month investigation follows allegations made elsewhere, most notably in New York, of kickbacks to schools in return for steering students to certain lenders.

But Morrison said those problems were not found in Kansas.

"Based on the information collected in our investigation, it does not appear that Kansas schools are engaging in the types of inappropriate or unethical lending practices identified by the New York Attorney General in his investigation of schools in New York and other states," Morrison said.

Morrison added: "However, there's always room for improvement."

He said a code of conduct would establish standards for schools to follow.

That code says any list of preferred lenders provided by a college must be in the students' best interest.

It also prohibits college employees from receiving gifts or trips from lenders, and bans college employees from receiving compensation for serving on a lenders' advisory board.

KU submitted information requested by Morrison.

KU spokesman Todd Cohen said that the university was glad Morrison conducted the probe, but added that KU doesn't steer students to specific lenders.

"There is no hard sell going on," Cohen said.

He said KU's student financial aid office helps students get through paperwork for loans, and it recommends that students try to secure as much federal financial aid as possible before seeking private loans.

"Generally, students are better off getting loans from the federal government," Cohen said.

Cohen said that no one at KU serves on an advisory board of a private lender, and that there was only one anecdotal report from several years ago about a lender saying it would provide scholarships if KU directed a certain number of students to its business.

"But we didn't do that," Cohen said.

He said he didn't know whether KU would adopt Morrison's recommended code of conduct because, Cohen said, KU has one that covers the same ground.

Morrison received information from 55 universities, community colleges and technical schools.

He said the schools reported that lenders have offered expenses-paid trips, meals and temporary clerical assistance for their financial aid offices in the past but the schools have routinely declined such offers. Morrison did not identify the schools or the lenders.

He said the schools reported that lenders offered gifts of nominal value, but that they are now declining those offers.

Several schools reported that one or more employees had served on lender boards or advisory panels in the past and a few currently serve in these positions. The employees aren't paid for serving on the boards, the schools reported, but are reimbursed by the lenders for expenses and travel to board meetings.

Comments

Godot 8 years ago

Gee, Morrison must have had a huge staff working day and night to thoroughly investigate the loan transactions of the universities in only 3 months.

"Based on the information collected in our investigation, it does not appear that Kansas schools are engaging in the types of inappropriate or unethical lending practices identified by the New York Attorney General in his investigation of schools in New York and other states," Morrison said."

That is a very carefully constructed comment. Based on the information collected in our investigation is a lot different than a statement like, "we have conducted an exhaustive investigation, pouring over thousands of documents and hundreds of interviews, and we are convinced there is no wrong doing ...."

"He (Morrison) said the schools reported that lenders have offered expenses-paid trips, meals and temporary clerical assistance for their financial aid offices in the past but the schools have routinely declined such offers. Morrison did not identify the schools or the lenders."

Routinely declined? That does not mean always. What gives?

"Several schools reported that one or more employees had served on lender boards or advisory panels in the past and a few currently serve in these positions. The employees aren't paid for serving on the boards, the schools reported, but are reimbursed by the lenders for expenses and travel to board meetings."

Why are any school employees on the boards of the lenders seeking to sell loans to students? This is a major conflict of interest.

"He said the schools reported that lenders offered gifts of nominal value, but that they are now declining those offers."

This means that they used to accept gifts, but have stopped, right? What are the specifics of this corrpution? Why are you letting them off the hook because they say they have stopped being corrupt?

This looks like a case of political payback.

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