Student Loan Amends
"Ms. Thomas' actions in connection with the student loan company Student Loan Xpress were inconsistent with USC's conflict of interest policy," says USC spokesman James Grant. USC's announcement of Thomas' departure yesterday came the same day Columbia became the 25th school to adopt a student loan code of conduct designed by the Attorney General that prohibits lenders from sharing revenue earned from student loans – what Cuomo calls "kickbacks" – with schools that place them on "preferred lender" lists.
Columbia becomes the first of these schools to be monitored by the AG's office and will submit annual reports on it financial aid. The school will also pay $1.1 million into a fund started by Cuomo for educating students and their families about financial aid – a fund with $10.6 million thanks to these settlements. "Columbia University does not admit, and expressly denies, that it has violated any law in connection with its student loan practices," says spokesman Robert Hornsby. Its fired financial aid director, David Charlow, made more than $100,000 from his SLX stock, according to Cuomo's office. "We regret that a long-time, well-regarded employee failed to uphold the trust that had been placed in him by the university and did not conform to standards that are commonplace in universities and business," Hornsby says.
Two months ago, the head of the National Association of Student Financial Aid Administrators (NASFAA), with 12,000 members from 3,000 schools, told Cuomo, "I know my members. They play by the rules. They are ethical. They don't cut corners. They don't take bribes." In an angry letter, Dallas Martin continued, "You have done them a great disservice and have dishonored their good names. What is worse is that you have encouraged students and parents to mistrust the advice counseling of financial aid administrators and schools." Yesterday, Martin stood with Cuomo(as seen in the above photo) and aplogized, saying he knew members mingled with lenders but didn't know some padded their pockets. His organization agreed to ban lender gifts worth more than $10 and raffle prizes at its annual conference and any lender-sponsored social events there. Cuomo can see for himself if the NASFAA abides by its agreement, since he's been invited to be the keynote speaker at this year's conference in July in Washington.
With the addition of Wells Fargo this week, the nation's top-five private student loan providers – also Sallie Mae, Citibank, JP Morgan Chase, Bank of America -- have signed reform agreements with Cuomo, as have Education Finance Partners (EFP) and CIT, the parent company of Student Loan Xpress.