Congratulations, university officials ““ you’ve won a
free trip to the Caribbean. And for those who didn’t make the
cut, how about an iPod or some cold hard cash?
A New York Times article recently revealed that private
student-loan lenders are providing perks to college financial aid
administrators ““ the officials who compile the list of
preferred lenders at their respective colleges.
Companies such as EduCap Inc. put on all-expenses paid trips to
the Caribbean for university financial aid administrators and their
guests, while other groups hold cocktail parties complete with
raffles for DVD and MP3 players.
The companies say this is the only way they can attract school
officials, and they see this as a way to give back to higher
education.
School administrators say petty prizes don’t have any
influence over their intention to serve students with the
preferred-lender lists ““ the university’s
recommendations of which loan lenders are the best choices for its
students.
Ronald W. Johnson, director of financial aid at UCLA, told The
New York Times, “I do not see it as a problem because of the
fact that what we are speaking about are those things that would be
benefits for all students.”
We do see this as a problem. A university cannot expect its
students to have faith in their college’s preferred-lender
list when it was partly funded by the loan companies competing to
make the cut.
It’s distressing to think that these lists ““
supposedly a resource to point students toward the best lenders
““ might be influenced more by the color of someone’s
iPod than by genuine research.
Financial aid administrators shouldn’t even appear to be
influenced by anything other than students’ interests.
Otherwise, how can we take these preferred-lender lists
seriously?
While many financial aid administrators across the country seem
to be getting a great deal (Caribbean vacations sound pretty good),
students are getting a terrible deal. The people who are hired
specifically to financially enable students to attend college may
instead be enabling only themselves.
If colleges and private lenders want students to trust them,
they need to put an end to the practice of giving and accepting
gifts intended to woo recommendations.
Some universities are rightly choosing to avoid this dilemma
entirely by refusing gifts from loan companies. Officials at USC,
for example, say they handle their financial aid recommendations
this way.
Others are at least putting monetary gifts to good use by
placing them in scholarship funds. Fordham University does this
with its money from Citibank.
According to the New York Times, students rarely take the time
to compare rates and make well-reasoned decisions about their
student loans. Instead, they mostly rely on preferred-lender lists
provided by their colleges.
Given the potential for such a glaring conflict of interest for
financial aid administrators, college students should be careful to
put a little more research into where they’re borrowing their
money from.
If financial aid offices are supposed to be a service to
students and help them pay for college, they need to put the
students above petty personal gains.
Colleges and administrators should reject any gift a loan
company offers and put the interests of students above their desire
for tropical vacations.