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For their own good
Fifty years ago, they were screwed-up kids sent to the Florida School for Boys to be straightened out. But now they are screwed-up men, scarred by the whippings they endured. Read the story and see a video and portrait gallery.
They hadn't even applied for a federal student loan.
But some students at the University of Miami discovered this summer that the school applied on their behalf anyway, providing Social Security numbers and other personal information to lending giant Sallie Mae.
All that was needed to secure the loans, students were told in letters from the company, was an electronic signature.
"I figured it was something they did to everyone," said Alyssa Mische, a freshman from Vienna, Va., who said she never applied for a loan from Sallie Mae and refused numerous offers.
Aid experts say the school may have violated federal laws that prohibit unauthorized sharing of private data. If the lender initiated unsolicited loan applications, that too would be a violation.
Such concerns come amid heightened scrutiny of student lending practices, already the subject of state, federal and congressional investigations.
University of Miami officials declined multiple requests to comment on the practices, saying they were amid settlement talks with New York Attorney General Andrew Cuomo. His office last winter initiated a national investigation of financial aid practices involving dozens of schools that enroll New York students.
A Sallie Mae official said her company would never initiate loan applications without a green light from the school. That would come in the form of a federal "school certification" document that includes privileged information.
"That's what triggers these letters," said Martha Holler, managing director for corporate communications at the company, a government-sponsored lender that went private beginning in 1997.
She said it was common for schools to initiate federal loan applications, but only after students tell their schools they want a loan from a specific lender.
Under the federal Higher Education Act, lenders are barred from sending unsolicited federal loan applications to students who haven't previously received them. They're also prohibited from providing inducements to schools, such as gifts or a share of loan revenues, in exchange for preferential treatment.
Until the Florida and national investigations into lending practices heated up last spring, many Florida schools chose a lender or initiated federal loans for students who didn't do so, said Bill Spiers, a spokesman for the Florida Association of Student Financial Aid Administrators.
He said he didn't consider the practice illegal and estimated that it happened around 5 percent of the time until schools grew concerned over appearances of impropriety.
But if a school sent an enrolled student's private information to a lender without authorization, that would violate the Federal Educational Rights Privacy Act, said Barmak Nassirian, deputy director of the American Association of Collegiate Registrars and Admission Officers.
Schools could skirt the law on a technicality, sending private data to lenders after students were accepted but before they enroll and federal privacy rules take effect, he said.
But it would be a "brazen" breach of ethics for them to do so, or to select a lender for students who didn't explicitly ask for one, Nassirian said.
"It does surprise me to know it's going on now, in this environment of sensitivity to unethical behavior," he added.
Several University of Miami students told the St. Petersburg Times they received the loan offers even though they never requested Sallie Mae loans.
Brittany Stockman, a freshman from Charlotte, N.C., received one such letter even though she had never applied for a loan.
"We recently received an electronic Federal Stafford loan application from your school that is now available for you to complete on the Web," the Sallie Mae letter began. "If you do not plan to attend the school listed above, or you do not wish to apply for a Federal Stafford loan at this time, please contact us to cancel your loan request."
Stafford loans are the most common form of federal student aid and are backed against default by the federal government. While students at some schools borrow them directly, most loans are issued by government-subsidized private lenders.
Nina Ruggiero, a freshman from Long Island, said she recalled receiving an application form for a federal Stafford loan. Her birth date, Social Security and driver's license numbers had already been filled in.
Other students said they had received letters referring to loan applications "initiated on your behalf" by the university, or applications that included personal data filled in for Sallie Mae loans they had never sought.
Such methods aren't in students' best interests, said Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group.
"It's disturbing that students would have their information released without their approval, if that's what's happening," he said. "We want students to think hard about taking on debt, and not just be shoehorned into federal student loans."
Sallie Mae controlled at least 96 percent of the loans issued at the University of Miami in 2006, according to the Student Marketmeasure, a company that monitors federal aid data.
Those loans includes $42.6-million issued in its own name; $26.8-million issued by the university and quickly sold back to the lender under a federal program; and $3.5-million issued by "lending partner" J.P. Morgan Chase under a loan purchase agreement.
Critics say the federal Department of Education hasn't done nearly enough in recent years to enforce lending regulations, and the department this summer proposed new rules to clarify prohibited activity and discourage the dominance of a single "preferred lender" at schools.
A dozen of the largest lenders, including Sallie Mae, have reached settlement agreements with Cuomo and contributed $13.7-million toward educating students on financial aid options. Twenty-six schools have paid $3-million to reimburse students for improper revenue-sharing agreements with lenders.
Florida schools have responded to those investigations by reforming their own practices, said Spiers, who also serves as financial aid director at Tallahassee Community College.
Before those inquiries, student loan officials would sometimes fill in the name of a lender when students forgot to include one, he said. Or they would start a federal loan application for a student that expressed reluctance to take a loan, if their financial situation suggested they would eventually need one.
"We stopped doing that a year ago," he added, expressing surprise that some schools might still be doing it. "We just didn't like the way it looked."
Times correspondent Greg Linch contributed to this report. Tom Marshall can be reached at firstname.lastname@example.org or (352) 848-1431.