In weekend developments related to the controversy over the relationships between student-loan companies and college financial-aid offices, a Wisconsin newspaper raised questions about the choice of a preferred lender at the University of Wisconsin at Milwaukee, and Duquesne University announced that it would stop accepting commissions from private-loan providers.
The University of Wisconsin at Milwaukee chose a single preferred lender in 2004 that offered student loans more expensive than those of two other companies, the Milwaukee Journal Sentinel reported. The university acted even though an advisory committee of its financial-aid officials had rated the company, Student Loan Xpress, behind two other lenders.
University officials had told students that it chose Student Loan Xpress because of its “real savings” to students, the newspaper reported. In 2006 the university expanded its list of preferred lenders to include five other companies. But the 2004 move proved to be a windfall for Student Loan Xpress. By 2006, it was doing $72.5-million in loan business at the Milwaukee campus, making the university its top client. Student Loan Xpress is now under investigation for allegedly giving financial-aid officials at other universities reduced-price stock, consulting fees, and other perks for steering business its way.
The university defended its decision, which was made by a committee led by Jane Hojan-Clark, the university’s director of financial aid. She later served on an advisory board run by Student Loan Xpress and received travel expenses but no additional compensation from the company. Another university official told the Journal Sentinel that Student Loan Xpress offered the best terms when the loan-repayment patterns of students were considered. The company offered other services that were beneficial to the financial-aid office, he said.
Meanwhile, the Pittsburgh Post-Gazette quoted a spokeswoman for Duquesne University as saying it would stop accepting commissions from private-loan providers listed on its Web site “to avoid the current confusion about the issue.”
In March, New York State’s attorney general, Andrew M. Cuomo, listed Duquesne among 60 colleges that had received money based on a percentage of loans made by a lender, Education Finance Partners, to each institution’s students. At the time, Duquesne disputed the attorney general’s characterization of the company’s payments as “kickbacks.” The university said they amounted to $16,000 a year that was reinvested in need-based student aid.
Education Finance Partners agreed to a settlement with Mr. Cuomo earlier last week. Duquesne’s decision covers two other lenders listed on its Web site, PNC Bank and Citizens Bank. —Jeffrey Brainard








