The New York State Attorney General‘s office says some college financial aid officers reaped personal profits, from the kickback scheme their schools had with “preferred” providers of student loans.
Syracuse University can consider itself lucky that, so far at least, no one on its payroll seems to have been personally implicated. But the executive director of financial aid at Columbia University, David Charlow, is among those who could be in some very serious legal trouble. He was allowed to buy stock in a company called Student Loan Express at bargain prices.
Mr. Charlow sold 7,500 shares for about $10 each and held options on 2,500 more shares. Officials in the attorney general’s office said he had originally bought the shares for about $1 each.
The officials said that Mr. Charlow sold additional shares — perhaps the result of exercising the 2,500 options — in 2005, and that he earned a total of more than $100,000 from all the sales. Student Loan Xpress was put on Columbia’s preferred lending list in 2005.
Officials at the university notified (Attorney General Andrew) Cuomo of Mr. Charlow’s investments. The attorney general has now subpoenaed Columbia for documents describing its relations with loan companies.
Financial aid bosses at the University of Texas in Austin and the University of Southern California also had stock deals with Student Loan Express, according to the attorney general’s office.
This must be a nervous time for officials at many colleges, with the state investigation continuing and Washington now getting interested in the scandal. The Senate’s education committee is asking lenders for information on the deals they had with colleges.
The biggest shame of all, of course, is that students strapped for cash to pursue their schooling unwittingly paid to enrich their colleges and, we now know, some of their officials. We can only hope that all of them will get that money back, as SU students will, and get the satisfaction of seeing these secret kickback deals stopped.