The University of California has begun reviewing its financial aid procedures in light of a New York State Attorney General inquiry that found evidence of several lenders giving kickbacks to schools for promoting their services.
New York State Attorney General Andrew Cuomo recently uncovered financial agreements between lenders Education Finance Partners, Sallie Mae, Citibank and financial aid officers at colleges across the country, including Pepperdine University in Malibu, Washington University in St. Louis and Boston University. The agreements sent a percentage of referred loans back to the school – Boston University received between 0.25 and 0.75 percent depending on the amount of the loan – in return for lenders’ placement on the school’s “preferred lender” list regardless of their interest rates.
The revelation has left the remaining campuses in the country – including UCSB – searching for improprieties in their own procedures. UC spokesman Ricardo Vazquez said the UC is considering joining Cuomo’s College Code of Conduct, which includes a promise that its financial aid officials will not accept bribes from lenders. By last week, 36 colleges had adopted the code, along with two major lenders: Citibank and Sallie Mae.
The UC Office of the President has initiated a personal audit of its relationships with private lenders, though, according to Vazquez, no UC campuses were implicated in Cuomo’s investigation.
“We will look at the preferred lending list at campuses and see if the financial aid offices are providing benefits to the lenders,” Vazquez said.
Director of Audit and Advisor Services Wanda Lynn Riley will be reviewing UCSB’s procedures. She said since the university is on the direct federal loan program, in which federal government money for loans is given directly to students with no private lenders involved, there is a low chance of any conflicts of interest being uncovered.
“I’m not anticipating any problems,” Riley said.
Riley said her audit would focus on the lender programs in the Office of Financial Aid, the Alumni Association loan consolidation program and Extended Learning Services, which offers professional and adult classes and makes “Lifelong Learning Loans” available to students taking more than 14 units.
The results of her audit will be forwarded to the UCOP, which will decide any future action, Riley said.
“There may be local or systemwide recommendations for improvement,” Riley said.
UCSB Director of Financial Aid Ron Andrade agreed that the direct nature of UCSB’s financial aid program means it is unlikely that improprieties exist.
“There are absolutely no conflicts of interest in [UCSB’s] financial aid office,” Andrade said.
Private lender loans are available to UCSB students in the event that the student uses up his or her federal loan money, Andrade said. However, he said this arrangement is made transparently between UCOP and private lenders, which would make it difficult for any scandal to exist.
UCOP holds agreements with two private lenders – Citibank, for undergraduate and academic graduate program loans, and Sallie May for professional graduate program loans – guaranteeing that students will obtain the loans. However, Andrade said students are given a list of all private lenders from which to choose.