Ivy League Loan Wilts
Free tickets to the Big East college basketball tournament at Madison Square Garden and to the Allman Brothers annual concert stand at a Manhattan theater were part of the perks that Columbia University's ousted financial aid director, David Charlow, received from a prime student lender. Those are the latest revelations of a national probe by New York Attorney General Andrew Cuomo. Following the University of Texas and Johns Hopkins University, Columbia has shown its top financial aid officer the door. Like the others, Charlow lost his job over improper ties to Student Loan Xpress (SLX), a lender he recommended to scores of Columbia students and families borrowing to pay for college.
"Mr. Charlow, a long-term and well regarded employee, abused a position of trust and violated the university policy on conflicts of interest," says Columbia spokesman Robert Hornsby. Charlow profited more than $100,000 on the 2005 sale of his 7,500 shares and 2,500 stock options in a company that was a precursor of SLX (Direct Marketing III, later Education Lending Group), according to financial records unearthed in the Cuomo investigation. Charlow received the shares from SLX President Fabrizio Balestri in 2002, the same year Columbia added SLX to its preferred lender list – lists that 90% of student borrowers rely on when applying for loans. Another sign of their friendship: Charlow stayed at Balestri's home during a business trip to San Diego last year.
With Charlow touting SLX to students and alumni, its stake in Columbia borrowing grew to 40% of the school's student loans. But now Columbia has punished SLX by dropping it from its preferred lender list. Columbia's firing of Charlow came the same day Ellen Frishberg left her post of 18 years as Johns Hopkins financial aid director, because she had pocketed $65,000 in undisclosed payments from SLX.
"While our investigation has uncovered many dirty secrets of the college loan industry, the stock and money that Student Loan Xpress funneled to Charlow and Frishberg were among the most flagrant. At times, it seems that Charlow and Frishberg were working more for Student Loan Xpress than for their universities," Cuomo says. His probe discovered Charlow and Frishberg even drafted "talking points" for SLX to rebut claims by My Rich Uncle, an upstart angling for a piece of the $85 billion a year student loan industry.
Charlow's attorney, Harvey Kurweil, would not comment. Frishberg's attorney, David Kasakove, says she served her community "with dedication." "Her priority was to open the doors to higher education to worthy students. She never intended to do anything that would be perceived as harmful to either Johns Hopkins University, its students, or their parents," Kasakove says.
A number of other colleges are probing ties exposed by Cuomo's office between financial aid officers and SLX, including the University of Southern California, Widener University, in Pennsylvania, and the online Capella University, based in Minnesota.