In light of ongoing financial aid scandals at institutions of higher learning around the country, University officials say students need not worry about similar corruption at Brown's Office of Financial Aid.
Three senior university financial aid officers - David Charlow of Columbia University, Lawrence Burt of the University of Texas at Austin and Catherine Thomas of the University of Southern California - sit on the advisory board for Student Loan Xpress, a company owned by the Education Lending Group, according to the Higher Ed Watch blog, which broke the story.
In return, they received shares in the Education Lending Group. The New York Times reported that Charlow has made over $100,000 selling his shares since 2003.
Each of the three universities listed Student Loan Xpress as a "preferred lender" for its students.
The CIT Group, which acquired Student Loan Xpress in 2005, has placed the company's three top executives on administrative leave, according to an April 9 press release.
The financial aid directors were also placed on leave at their respective universities shortly after details of the financial transactions first emerged on the Higher Ed Watch blog April 4. New York Attorney General Andrew Cuomo and the universities are conducting investigations into the stock holdings, according to Higher Ed Watch, which is run by the New America Foundation, a nonpartisan think tank.
Director of Financial Aid James Tilton, who used to work in Columbia's office of financial aid, could not be reached for comment.
Brown has several safeguards in place to prevent a conflict of interest between officers and lenders, said University spokeswoman Molly de Ramel. "Financial aid officers sign a strict conflict of interest statement, which prohibits them from holding stock in a company of that kind," she said, referring to student loan companies.
The University participates in the Federal Direct Loan Program, in which "the federal government acts as the lender and provides Federal Stafford and PLUS loan funds directly to Brown for our students and parents. Therefore, we do not have a preferred lender list for federal student loans," according to a written statement provided by de Ramel.
"If a parent requests information on a private loan, we direct them to the 'Financing a Brown Education' link" on the University's financial aid Web site, de Ramel said.
That link leads to an online brochure that states that "the Office of Financial Aid is not able to endorse one loan product over another ... Families are urged to utilize the Internet to research details on loan products, conduct comparisons between loan offerings, shop the loan marketplace and undergo non-binding pre-approval processes to determine the family's tolerance for borrowing."
The brochure does contain a list of loan programs "with which Brown University is most familiar." That list does not include Student Loan Xpress.
