Fed Looked At For Student Loan Investments

Education Department Official, 3 Universities Under Scrutiny For "Potentially Improper Stock Grants"

(CBS)  In addition to Fontana, the prospectus EDLG filed with the SEC in 2003 listed Burt and Thomas, and Columbia financial aid administrator David Charlow among its selling stockholders.

According to the prospectus, Thomas and Burt each owned 1,500 shares of EDLG stock and 500 stock options, while Charlow owned 7,500 shares and 2,500 stock options.

Charlow earned over $100,000 on the sale of his shares, according to the attorney general’s office. Columbia placed Charlow on a paid leave of absence Tuesday, when the university found out from Cuomo’s office that Charlow had owned EDLG stock until 2005. Charlow did not immediately return phone messages left at his home.

“The case here appears to involve a single official who may have violated our policies, and we believe that this has had no adverse financial consequences for students and their families,” two Columbia deans wrote Thursday in a letter to students.

It was in 2005 that Columbia approved four preferred lenders, including Student Loan Xpress, that “provide an array of products that are beneficial to the college's diverse student population,” spokesman Robert Hornsby said. But on Thursday, Columbia temporarily removed Student Loan Xpress from its list and persuaded the company to delete from its website Charlow’s endorsement of its “very high standards for service.”

Burt told CBS News in 2001 he had paid $1 per share for his investment in Direct III Marketing, a student loan consolidation company that would change its name to EDLG in 2002.

“I was told it was a risky venture,” Burt said. He said he was advised of the investment opportunity by Fabrizio Balestri, who Burt said, used to work for American Express Student Loans, whose staff went on to form EDLG and Student Loan Xpress. Balestri is now president of Student Loan Xpress.

Burt said he recalled selling his shares in 2003 for $9-to-$12 — about a $15,000 profit.

“When I purchased those shares, they were not in the FFELP business,” Burt said, referring to the federally-backed student loan program. He said that the company was at the time not dealing with current students but only loan consolidations for former students. Student Loan Xpress now does both. It is also one of UT-Austin’s 20 preferred lenders, handling about 4%, or $10 million, of the school’s annual loan volume.

In California, USC placed Harris on paid leave Thursday. USC spokesman James Grant said the school “will now review the information in the letter and respond” to Cuomo’s office. Student Loan Xpress is one of nearly 30 preferred lenders for USC students, Grant said.

CIT, a New York City-based commercial and consumer financing company with $74 billion in managed assets, acquired EDLG two years ago. Student Loan Xpress is its only subsidiary in the student loan business, said CIT spokesman Curt Ritter.

“The reported transactions in securities of that company occurred several years prior to CIT's acquisition of the company. We are currently seeking to determine the facts surrounding those transactions," Ritter said.

[MichalHussay]

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[mainemade]

No wonder colleges are so expensive....

[glennj6]

Up until the legislative session of 2003, tuition-setting authority in Texas was in the hands of the Texas State Legislature. In 2003, by way of House Bill 3015, the Legislature granted tuition-setting authority to public university governing boards.

Since that time, the Boards of Regents of the Texas A&M University System, the University of Texas System and the University of Houston System (all members of which are appointed by the Governor) have visited draconian tuition increases on Texas students and their families.

While Attorney General Andrew Cuomo is investigating stock grants and possible kickbacks from student loan companies to financial aid officials, I think he would be wise to determine if members of the respective Boards of Regents have any financial ties to the loan companies, as well.

Everybody might be shocked about what is uncovered.

[mwcinin]

For those of you that think college is not worth it, well you deserve what you get. For every Bill Gates there are 10,000 out of work dead beats that I'm paying their welfare for. In a lot of ways the college experience teaches you very little. However, a college degree seperates you from the 1000's of others that want the same job. An employer cannot possibly review all applicants for a job, so they set up weeding mechanisms, such as a college education. It is an indicator of self management, fortitude, stress management, time management, general knowledge, and the ability to deal with futility. It is not and indicator of intelligence or job specific knowledge. Again, for those of you who don't think its worth it; I say "No!"..."I don't want fries with that!"

[mo005]

I went to college for three semesters. Talk about a waste of time and money. I went to learn about computers. Didnt learn a *** thing about them there. Thaught my instructors how a hard drive works, and what a motherboard, processor,and memory chip looks like. I learned about computors on my own. Oh well I lied, they taught me how to make a screen saver and how to copy and paste. They dont teach anymore. You have to take drama class's and walking class's all this *** that has no bearing on your major. I learned more about computors from a next door nieghbors daughter than I did from any professer in college. I droped out and went back to work. Now I owe all this money for what nothing.

[mo005]

monkfellow: Thank you you said it all for me.I agree 100 percent.

[yorkark]

This whole country is on the take,but the well is running dry. What are they going to do when we are just illigal immigrants who cannot read or write. Third world country here we come.

[dowjones20k]

"Tuition profits at Universities are indeed going toward Bushes war in Iraq".

Posted by djermano1


HAHAHA

Are you serious? Do you honestly beleive that the elite academia would stand for Bush getting in on the charade of higher education?

This is another ploy ... one that is causing huge financial burden, while dupping the American public.

Yes, yes, send your children to college, let them learn to drink, party, sleep in class, take classes that have nothing to do with the major or be educated by a TA or ST? PLEASE !!!

All the while, overpaid at $150,000 a year professors are on sabaticals, writing books that will soon be required reading in their courses, all the while looking to pad their already fat retirements? PLEASE !!!

You dont think the elite are capable of stealing from the American public? Think again !!!

College is over-rated and just another sad gimmick in American society ..... ask Bill Gates.

[mwcinin]

djermano1


Your comments are idiotic; ergo you are.....

[monkfellow]

I KNEW someone would slam the president..it boggles the mind.
"My dog died, it's the fault of the Bush war machine that we don't have more state aid for veterinary students...."
You could count the number of poor kids going to Columbia on one hand. UTA and USC are top flight schools that are extremely selective, no matter how "diverse" pressure groups try to force them to be. Student aid is a small part of the picture in those institutions.
The bigger crime is the Clinton sleaze machine pushing through the legislation in the 1990s taking the free market out of student lending and putting it in the hands of government officials. Absolutely power corrupts, absolutely.

[rray52]

Greed and corruption in our universities?
Impossible, They are shining beacons of integrity.

"Say it aint so Joe."

[mcvet]

Where has America gone? It seems those in our Government are just out to pad their wallets at Tax Payer Expense and those who are supposed to prevent such things just jump on the bandwagon. We need to turn around this country and get back to what we as a nation stand for. HONESTY, COMPASSION and COMMON GOOD!

[djermano1]

Making money off the backs of poor students, what a racket. Tuition profits at Universities are indeed going toward Bushes war in Iraq. They don't tell you this being afraid of the public withdrawing from schools across the country. Low lifes in high places. Accreditation is a complete farce in my book.