Student Loan Xpress and the Senators

The New America Foundation has a roundup of the widening investigation into corrupt relationships between colleges and Student Loan Xpress. Johns Hopkins, Widener in Pennsylvania, and the for-profit Capella University are three more names on that list. The Times today focuses on the way that Student Loan Xpress made cultivating financial aid officers a specific business strategy. Three of their executives have been placed on leave by their parent company CIT Group.

Some questions going forward, that I will be trying to answer and I hope you can help:

1) Student Loan Xpress is only the 8th-largest lender. It can't be the only lender pursuing these kinds of marketing relationships with financial aid officers. Who's on Nelnet's and Sallie Mae's advisory boards?

2) What about the Congresspeople and Senators like John Boehner and "Buck" McKeon who have recieved huge contributions from the student lending industry? Did they look the other way at these preferred lender arrangements? Fabrizio (Breeze) Balestri, the president of Student Loan Xpress now on leave, has personally contributed over $10,000 to Buck McKeon's PAC, the 21st Century PAC. Buck McKeon's list of donors is a who's-who of the lending industry and the current scandal as well. (hat tip to one of my readers).

I think everyone in the student advocacy world is a little sad to hear about the dirty pool played by such prominent financial aid administrators. In the past the two groups have often acted as allies to lobby the government for increased federal aid, and to try to get better information to students.

It's too bad, but we must face the reality that colleges do in some sense rely on increased student debt. If it weren't for the continued availability of student loans, it would be hard for colleges to increase tuition so much faster than inflation. This is the big-picture conflict of interest and individual relationships between lenders and financial aid officials are only a small part of it. In the long run, addressing student debt is about more than rooting out corruption-it's about finding ways to control costs, and colleges will have to get off the gravy train and fully participate in that process.