Financial Aid Scandal second draft
I have been a Financial Aid Administrator for eight years. I enjoy my job, for the most part, and feel that I perform a valuable service for the students at my college. Like other Financial Aid Advisors, I take pride in my work and strive to do the best job I can.
Last year, students took out $85 billion in loans to pay for ever-increasing tuition. Many of these loans, such as the Stafford Loan Program, are government guaranteed and have set, regulated rates. Because of these regulations, it is unlikely that students borrowing through these programs could have received poor terms on their loans. However, more and more lenders are offering private student loans. These loans are not regulated. Private student loan volume has increased dramatically in the past five years and estimates place total volume at $17 billion. Private loans offer little of the protection that federally guaranteed loans offer, and often have very high interest rates.
Recently, there has been a scandal concerning Financial Aid Officers and the student loan industry. An investigation has caused fears that the relationships between the lending industry and financial aid administrators has inflated the cost of borrowing for college. At the heart of the scandal is preferred lender lists, which are recommendations made by colleges and universities to student borrowers. New York Attorney General Mario Cuomo has accused colleges across the country of taking “kick backs” from student loan companies. The Attorney General says that lenders have given college Financial Aid Administrators payments, travel and other perks in exchange for a place on their preferred lender lists. There were a few colleges and financial aid officers who admitted to such scandalous behavior and agreed to stop the practice. Seven universities have agreed to pay students back the money they received for sending students to lenders.
College Financial Aid Advisors have seen their public image tarnished by the actions of some of their peers. Newspaper articles and news commentators have condemned the entire industry based on the behavior of a small minority. As a result of this controversy, the Financial Aid industry has developed a code of conduct to regulate this behavior. Congress has passed the Student Loan Sunshine Act to ensure that changes in the student loan industry and the relationships between colleges and lenders are consistent throughout the nation. The Student Loan Sunshine Act was introduced by Senators Edward Kennedy (D-MA) and Richard Durbin (D-IL) as a way to “protect students and their parents from exploitation by lenders who offer gifts to colleges as a way to secure loan business.” The Act will also require lenders to report their rates and justify those rates on all loans made to students.
I did not dream of growing up to become a Financial Aid Officer it happened by chance. But I do work in Financial Aid and I take pride in my job. It is a hard job with many rules and regulations. The abuses that caused this scandal are rare and committed by a small number of people. According to the National Association of Student Financial Aid Administrators, Cuomo “needlessly tore the fabric of trust between schools and students by exaggerating the problem.” Most Financial Aid professionals work hard to provide students with the resources they need to achieve their higher education and career goals and do not deserve to be lumped in with the few who allowed themselves to be corrupted.
