aTypical Joe: a gay New Yorker living in the rural South

Saturday, June 16, 2007

Chronic widespread student loan abuses

This deserves more attention than I’ve given it. From The Chronicle (subscription):

Questionable practices that have come to light in investigations of the U.S. student-loan industry were routine and widespread, involving payments of illegal or improper inducements at dozens of colleges and lenders, both large and small, according to the first Congressional report on the matter.

The report, released on Thursday by Sen. Edward M. Kennedy, the Massachusetts Democrat who is chairman of the Senate education committee, may not change the fundamental understanding of a situation in which college administrators were accepting personal benefits—from pens and notepads to vacation trips and stock options—from lenders in return for access to their students.

It does, however, make public a depth of detail on the case that makes it harder for colleges and the lending industry to suggest that students were not shortchanged, or that potential violations of the federal ban on paying inducements to secure loan applications were rare or isolated events.

The 50-page report by Mr. Kennedy’s staff, titled “Report on Marketing Practices in the Federal Family Education Loan Program,” is backed up by a 530-page compilation of e-mail messages and other documents that contain ever more embarrassments for colleges and loan companies already held up to public shame by disclosures over the past several months.

While I certainly agree with Kevin Bruns, executive director of the industry group America’s Student Loan Providers, that “the vast majority of the men and women in the financial-aid and student-loan communities are honorable people trying to do the right thing,” it seems to me they must see the light and come to understand that some longstanding practices accepted as all well and good must change.

Oh, and kudos go to New York State Attorney General Andrew M Cuomo.