NEW YORK (AP) — Columbia University will pay $1.1 million into an education fund and a national financial-aid organization will crack down on gifts from lenders as part of state Attorney General Andrew Cuomo’s effort to reform the student-loan industry, Mr. Cuomo said yesterday.
Under the agreement, both Columbia and the National Association of Student Financial Aid Administrators (NASFAA) will adopt codes of conduct that ban such practices as lender gifts to college financial-aid officers, and both will be monitored by Mr. Cuomo’s office for five years.
The move follows Columbia’s dismissal of David Charlow, an associate dean of student affairs who had previously been suspended because of his ties to the loan company Student Loan Xpress Inc.
Columbia said in a statement that it “does not admit, and expressly denies, that it has violated any law in connection with its student-loan practices.”
The university said Mr. Charlow’s actions violated its conflict-of-interest policy but added that no students were adversely affected.
Mr. Cuomo said Columbia officials acted promptly to remedy the situation once they were made aware of it. “They took quick action, they were cooperative and the result will be better for all involved,” he said.
In his probe of the $85 billion college-loan industry, Mr. Cuomo has said he found cases of colleges getting kickbacks from lenders granted preferred status by the schools. And, Mr. Cuomo said, some college loan officers have received trips to luxury resorts and gifts from lenders.
NASFAA President Dallas Martin, who joined Mr. Cuomo in the attorney general’s Manhattan office yesterday, said he reacted defensively when Mr. Cuomo first questioned his members’ integrity.
“Today, I want to apologize to him as I’ve done previously, but personally today, to say that I was wrong,” he said. “We didn’t have all the facts.”
Under the code of conduct NASFAA agreed to, gifts from lenders to college financial-aid officers worth more than $10 will be banned. Mr. Martin said that “wining and dining” of financial-aid officers by lenders at his organization’s annual convention will no longer be tolerated.
“I still think that there’s a fairly small number of individuals that have actually really stepped across the line,” he said. “I’m not saying a lot of people have not been close to the line, but they haven’t really violated the truth.”
While the agreement is not binding on individual NASFAA members, Mr. Martin said he expected them to comply.
Earlier this week, San Francisco-based Wells Fargo agreed to abide by Mr. Cuomo’s code of conduct.
Mr. Cuomo had previously reached agreements with Citibank, Sallie Mae, JP Morgan Chase and Bank of America. There were also agreements with Education Finance Partners (EFP) and CIT, which is now the parent company of Student Loan Xpress.
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