SHANNON KELLY
News Editor
Pepperdine, along with more than 100 other universities, is under investigation by New York State Attorney General Andrew Cuomo. He suspects the schools and their preferred student loan lenders of engaging in deceptive lending practices that could potentially affect the 75 percent of Pepperdine students who receive financial aid.
Pepperdine was among the colleges to receive a letter from Cuomo asking for their cooperation with the probe. The letter requested 25 different kinds of documents, including a list of the financial aid office’s counselors and officers, documents setting the school’s criteria for selecting lenders and for including them on “preferred lenders” lists, and documents concerning any revenue sharing agreements the school has with lenders as well as those concerning compensation, gifts, meals and paid trips by lenders to the school.
Director of Financial Assistance Janet Lockhart declined to comment on the investigation but referred the Graphic to Director of Public Relations Jerry Derloshon who confirmed that Pepperdine had received the attorney general’s letter in February and said the university is willing to cooperate with the investigation.
“Our university responded to the attorney general, and in that response we assured his office that the best interest of our students is a concern we both share,” Derloshon said. “We indicated that our five schools’ financial aid offices would work together with the attorney general to explore the issues and explore our own practices.”
Derloshon said the university knows of no wrongdoing, but views the circumstance as an opportunity to review current practices.
“This is something before us, and we want to make sure we are doing the right thing,” Derloshon said. “But we feel we’re in a good place.”
Students say they trust Pepperdine.
“I am confident that they will handle the situation professionally and responsibly,” junior Erin Dee Armstrong said.
Lenders that are under investigation include some on Pepperdine’s preferred lenders for all five of its schools: Sallie Mae, NelNet, The College Board and Citibank.
While there have not been specific findings with Pepperdine, a report by CBS news cited an “unwritten” revenue sharing agreement between Citibank and Syracuse University that pays Syracuse .5 percent of the interest earned on student loans, “a deal worth more than $100,000 a year,” according to the report.
Some companies such as Sallie Mae responded to the CBS report. “CBS’ stories implied that students are disadvantaged by lender lists such as those at the University of Texas and elsewhere. The opposite is true,” stated a Sallie Mae press release. While Pepperdine suggests potential lenders, like the ones under investigation, students decide which to use.
“The financial aid offices identify potential lenders based on service capabilities and reputation, but the choice is ultimately the student borrowers,” Derloshon said.
Since most universities’ preferred lenders lists are technically suggestions some of the issues raised by Cuomo may be more concerned with ethics rather than legality
“From an ethics standpoint, what is important is disclosure and transparency,” said Communication Division Chair Robert Chandler, who is an expert in organizational ethics and the author of “Managing Risks for Corporate Integrity: How to Survive an Ethical Misconduct Disaster.”
He said for a company to maintain ethical integrity it needs to make sure to disclose certain costs and fees including commissions involved with student loan transactions.
To read a pamphlet that Cuomo’s office has prepared to provide guidance to students and parents about student loans, go to www.oag.state.ny.us.
03-22-2007