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National student loan scandal strikes Milwaukee campus
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by Cassie Kornblau
Wednesday, April 11, 2007
After learning the director of financial aid at the University of Wisconsin-Milwaukee sits on an advisory board of a private student loan company, some are concerned about what could be an ethical gray area.
The Milwaukee campus controversy surrounds Jane Hojan-Clark, who sits on the Student Loan Board of Xpress, a company that has come under scrutiny recently after New York Attorney General Andrew Cuomo discovered colleges were receiving financial kickbacks from student loan companies.
Financial aid administrators across the country that are associated with Student Loan Xpress have come under scrutiny as well.
Last week, The New York Times reported financial aid administrators at Columbia University, the University of Texas and the University of Southern California held stock in Student Loan Xpress while the company was on the universities' preferred lender lists.
According to The New York Times, Cuomo's aides presented new details Monday that financial aid officers at John Hopkins University and Capella University were paid consultants for Student Loan Xpress.
Susan Fischer, director of financial aid at the University of Wisconsin-Madison, defended Hojan-Clark, saying she sits on the advisory board to represent students on access to loans.
"She has no stock, no payback," Fischer said. "She is just trying to help her students and unfortunately is being used as an example of what not to do."
Tom Culligan, legislative assistant to U.S. Rep. Tom Petri, R-Wis. — who sits on the House Education and Labor Committee currently examining the student loan industry —said no matter the intention of the financial aid officers, it is best to be neutral because it is easiest to serve students.
"A lot of student financial aid officers are good people but get a negative perception," Culligan said. "Remaining neutral and impartial in these cases eliminates controversy."
Petri is working with his colleagues to ensure more transparency between financial aid officers and student loans companies, Culligan said. However, he added that ultimately Petri would like to see preferred lender lists eliminated.
At UW-Madison, financial aid administrators choose not to sit on any advisory boards, so there is little conflict of interest and little perception of unethical practice.
Fischer said student loan companies have asked her to serve on an advisory board, but added she is not comfortable with the idea and does not have the time for it regardless.
"I do not criticize colleagues who do serve on advisory boards," Fischer said. "Advisory boards do deserve a student voice, but it is often construed as a conflict of interest."
Fischer said UW-Madison students are told to maximize the money they first receive from the government through Stafford loans.
However, Fischer said since the majority of students need additional support through loans from private companies.
"We publish five lenders for private companies," Fischer said. "We do not consider them preferred but rather suggested."
Fischer said loans are approved from various lenders — not only the five listed — and the school's website links students to a more detailed list of alternative loan companies.
"We do not get anything back from loan companies — no revenue sharing — nor are we interested in building relationships," Fischer said. "We just want to help our students."
Anonymous (April 11, 2007 @ 3:24pm):
Capella University is a complete scam. Details about this money-making for-profit "school" may be found at:
http://www.capellauniversity.org
The site documents the blatant discrimination and retaliation against students who speak out against the incompetence of the "Capella Experience", exposes unethical instructors, such as Diane Stottlemyer who purchase degrees from known diploma mills and yet are allowed to continue "teaching" at Capella, and much, much more.
Anonymous (October 20, 2007 @ 2:29am):
In addition to the kickbacks Capella is paying to other schools, they were also just found in violation of Federal Law (the Family Educational Rights and Privacy Act) on ten counts for refusing to turn over education records demanded more than three years ago (FERPA requires that they turn over records within forty-five days of the initial request). Not only that, but that investigation into Capella's illegal practices still isn't closed.
Then there's the matter of Capella's President, Michael Offerman, who the Chronicle of Higher Education reported tried to hide Capella's kickback scheme with UC Irvine. The Chronicle pointed out that UCI has essentially become a vendor for Capella University and that both schools tried to hide their relationship -
"While setting up the relationship, Gary W. Matkin, dean of continuing education at Irvine, wrote an e-mail message in September 2002 to Capella's president, Michael J. Offerman, to tell him that Capella's 'lawyers still have problems with our marketing arrangement, even though we have been careful not to talk about per-student arrangements.'"
According to Capella's latest press release, "Dr. Offerman's national role has been expanding. By creating an interim university leadership team, we will be able to continue to leverage Dr. Offerman's leadership, while allowing him more time to focus on his new role. This is an excellent team that I'm confident will keep us moving forward."
In reviewing the "principles" of his Transparency by Design group, one can't help but note how hypocritical it is: one of those "principles' states,
"The institution discloses throughout its marketing and communications, accurate, truthful information about its mission, accreditation, courses and programs, services, policies, transfer credit policy, tuition and fees, use of recruitment incentives, its recruitment processes, and other factors important to prospective and current students and other stakeholders."
If that's really true, then why won't Offerman and Capella disclose how many schools around the country Capella pays kickbacks to? Capella's own web site states that they have "alliances" with 25% of all community colleges in the country.
Michael Offerman is speaking at the The National Press Club - Washington, DC this coming Monday, October 22, 2007 at 11:00 AM Eastern on his so-called Transparency by Design" initiative. Hopefully a reporter will ask him why Capella refuses to disclose how many schools they pay kickbacks to. After all, that's what "Transparency by Design" is supposed to be about!
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