Friday, May 04, 2007

Student Loan Scandal: Alumni Associations Now Involved

By Bryan O’Keefe

Well, newspapers and websites across the country have the latest revelations in the growing student loan scandal this morning. This time the alleged wrong-doers are not the financial aid offices, but, rather, alumni associations. The NY State Attorney General’s office is investigating whether several alumni associations gave Nelnet, a private student loan company in Nebraska, access to its membership and use of their logo in marketing letters in return for money.

There are several dimensions to this latest story, all of which are worth mentioning. First, the Nebraska State Attorney General recently investigated Nelnet for any wrong-doing and found that the company was basically above-board – which means that either the Nebraska AG missed something or the NY AG is making something out of nothing. Time will tell which one is true. Second, on its face, this scandal does not seem quite as bad as the more startling revelations about kickbacks in actual financial aid offices. Let’s be honest here: how many people are actively involved with their alumni associations? How many folks would get a letter in the mail from Nelnet, see that their alumni association logo on the promo letter and then pick Nelnet solely on that basis? Maybe I am underestimating the influence of alumni associations, based partly on my own experience, but I just can’t see this happening too often. What made the financial aid office scandal so terrible was that many students do take the advice of university financial aid administrators – I am not quite so sure that alumni association folks have the same sway.

That all being said, the issue should still be thoroughly investigated. We need more disclosure in higher education and that goes for alumni associations too. If the alumni associations were actually being paid off to promote Nelnet, then it should have said so somewhere in the Nelnet promotional letter. If that wasn’t being done, then alumni association members need to know about it and the NY AG’s office should pursue appropriate penalties. At this point, it’s much more a matter of principle than practical effect, but principles are important too.

Also, one small note – a reader of ours criticized my recent blog posting on the Hula Hut Happy Hour and said that we were not taking the student loan scandal seriously enough. I beg to differ. The student loan scandal is a huge deal, perhaps one of the biggest scandals to hit higher education in years (from what I have been told). The Hula Hut Happy Hour was an amusing, over-the-top event, but that should not detract from the seriousness of the charges being leveled against universities and private lenders.

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