On Monday, May 21, 2007, Columbia University released its financial aid director, David Charlow, after documents became available showing that he promoted a student loan company in which he held a financial stake. Charlow had sent letters to parents and alumni on three occasions praising the lender–Student Loan Xpress. In a letter to parents of Columbia students in 2003, Charlow said that his office had “been impressed” with the services of a company affiliated with Student Loan Xpress, and in another letter in 2004, he encouraged alumni to refinance their student loans with a Student Loan Xpress affiliate that was “expert” in the field, according to a recent New York Times article.
Recently discovered e-mail messages, first reported by the New York Post, revealed details of how Charlow worked with Student Loan Xpress, including advising it on marketing strategy and pushing its loans. Charlow also accepted tickets provided by Student Loan Xpress to sporting events and concerts at a time when he was urging parents and alumni to do business with the company, according to the New York Times. Columbia put Charlow on paid leave in April, when it was revealed that he held $100,000 or more in shares of Education Lending Group, the parent company of Student Loan Xpress.
Johns Hopkins University has also taken action. It recently announced the resignation of its long-time financial aid director, Ellen Frishberg. According to the university, Frishberg had received about $65,000 in consulting fees and tuition payments from the same student loan company. Johns Hopkins said that Student Loan Xpress had been on the university’s list of suggested lenders during the years Frishberg accepted payments from the company. In a recent statement, New York Attorney General, Andrew Cuomo, said that the relationships of Charlow and Frishberg with Student Loan Xpress were among the most problematic he had come across in his ongoing investigation of financial aid officials.
Lawrence Burt of the University of Texas at Austin is a third financial aid director also implicated in Cuomo’s investigation. Burt was fired in mid-May after he was found to have benefited personally from a relationship with Student Loan Xpress.
On May 10, 2007, the House of Representatives passed the Student Loan Sunshine Act, H.R.890, to ban gifts and payments by student loan companies to universities. Representative George Miller (D-California) and Representative Howard McKeon (R-California) co-drafted the legislation in hopes to clean up the reported $85 billion industry. Additionally, Cuomo developed a code of conduct, which the nation’s four largest student lenders and at least 22 colleges have already signed on to, and on May 7, 2007, New York’s legislature passed the Student Lending Accountability, Transparency and Enforcement Act of 2007 to address conflicts of interest in the student-loan industry.