The New York Times has been doing some great digging on the relationship between higher education institutions and loan companies; here’s the detailed article by Jonathan Glater, setting out some of the less-than-clean practices that some universities and loan companies seem to be engaging in (particularly kickbacks). A fabulous follow-up demonstrates that the problems relate to individuals as well as systems:
The directors of financial aid at Columbia University, the University of Texas at Austin and the University of Southern California held shares in a student loan company that each of the universities recommends to student borrowers, and in at least two cases profited handsomely.
The ‘preferred lender’ system is bizarre. It’s up there with the current discussion in the UK over how Gordon Brown can massage the budget for universities by selling off the debt (accumulated by students, mostly as a result of the recent reintroduction of higher education fees) of the (publicly owned) Student Loan Company. If it works, it’s truly absurd.