Student aid officials meet, listen

Lenders take a tough line, but state universities aren't waiting to make changes.

Published May 25, 2007

TAMPA - One speaker called it a natural disaster. Another said it wasn't much of a problem at all.

Such were the mixed feelings at this week's annual gathering of the Florida Association of Student Financial Aid Administrators, as state and federal investigations continue into colleges' relationships with lenders.

On one hand, lenders paid nearly three-quarters of the $173, 000 tab at the Tampa Marriott Waterside event.

But two weeks after Attorney General Bill McCollum launched his own investigation, some Florida schools have begun to alter their policies:

- At Florida State University, financial aid director Darryl Marshall resigned from three lender advisory boards, including troubled Student Loan Xpress, one day after the St. Petersburg Times reported his membership;

- Florida International University has banned lender gifts and free meals it previously accepted, and paid back money it earned from student loans.

- Florida Atlantic University has severed ties with a lender, Clearwater's University Financial Services, that would have paid the school a share of loan revenue.

- University of South Florida officials said they accepted no lender gifts except "bagels or doughnuts, " but didn't tell the Florida attorney general about free printing services lenders have provided in recent years.

Mixed messages

At the convention's opening luncheon Wednesday, St. Petersburg College president Carl M. Kuttler Jr. spoke of the "tough questions" Florida colleges must begin asking.

"This whole profession has been on a tsunami wave for the last three or four months, " he told a glum-faced audience.

He told the assembled aid officials they should return to their colleges, form special committees, and sharpen up their ethics policies to set an example. "We will learn from this and benefit, " Kuttler promised. "We will make the changes."

But earlier in the day, the Washington lobbyist for the $85-billion student loan industry struck a tougher line. He said congressional and state investigators who have been investigating lenders and forging codes of conduct are guilty of "government intrusion" into the relationship between colleges and students.

Brett Lief, president of the National Council of Higher Education Loan Programs, said there had been some abuses by lenders, and those that still exist "are being phased out."

But in terms of the overall student loan industry, Lief said, "There's a perception problem. There's not a real problem."

Florida changes

Real or not, many Florida schools aren't waiting to make policy changes.

In its report to Attorney General McCollum, Florida International University said it will no longer accept free meals or other gifts, and it has returned $83, 000 it received from Nelnet as a share of loan consolidation deals with its alumni.

Under federal law, lenders are forbidden from providing inducements of value in return for a share of loan volume.

But the University of South Florida said it had no plans to cancel one lender contribution it failed to report to McCollum, who had asked for a report on gifts or "anything of value" provided to colleges.

The university told him it had accepted only "breakfast food items such as bagels or doughnuts."

But it also accepted 60, 000 brochures printed this year by preferred lenders for the financial aid office, at a cost of more than $6, 000.

"The university's position is that this is neither inappropriate or illegal, nor does it constitute a gift, incentive or inducement offered by a preferred lender to the university, " said spokeswoman Lara Wade.

Tom Marshall can be reached at tmarshall@sptimes.com or 352 848-1431.