Pedro de la Torre III
Tuesday, May 1, 2007
The financial aid office at Florida A&M University, a historically black university in Tallahassee, Fla., has been steering potential student borrowers to two “partner” lenders in a manner that could easily suggest to students that they have no other lending options. By law, schools must give students a choice of lenders.
Recently, universities and lenders across the country have been caught up in a wave of scandals involving conflicts of interest in college financial aid offices. Lenders have offered meals, vacations, staff time, revenue sharing deals, scholarship funds, stock options, and other inducements to financial aid offices or their employees, apparently in hopes of being listed as a “preferred lender” and recommended to students. Because students generally trust that their school is impartial and acting in their best interests, students overwhelmingly follow their schools’ advice.
FAMU’s website* lets potential student borrowers know that the school has “begun a transition from the Direct Loan Program to the Federal Family Educational Loan Program.”
This should raise some red flags for students and education advocates. Many lenders have used inducements to convince colleges to drop the direct loan program, even though it is cheaper for taxpayers, so that these lenders can sign up more student borrowers.
Lenders also target schools on the FFEL program with inducements in order to be placed on their “preferred lender list.” FAMU tells it students on the school’s financial aid website:
“…Florida A&M University has chosen two lending partners who bring an extensive variety of products and services to our student and parent populations. These lenders,
, are committed to working with you and/or your parents/guardians in making certain that all of your educational financial needs are addressed in a timely and efficient manner.
Please visit the following website for
to begin your loan application process for students with the last name and parents with student’s with the last name beginning with A-K [sic].