ALBANY, N.Y. – New York Attorney General Andrew Cuomo’s office is investigating financial aid officers from three universities suspected of accepting shares of company stock of a student loan provider in return for being placed on their institution’s preferred lenders lists.
A subpoena has been sent to Columbia University, as well as letters to the University of Texas at Austin (UT) and the University of Southern California (USC), for documents and information describing their relations with student loan provider Student Loan Xpress. Columbia’s executive director of financial aid, David Charlow, UT’s associate vice president and director of student financial aid, Lawrence Burt, and USC’s associate dean of admission and director of financial aid, Catherine Thomas, all held stock options in September of 2003 for the lender, listed as “preferred” by all three institutions.
Securities and Exchange Commission records show that while Burt and Thomas owned as many as 1,500 shares each, Charlow owned 7,500 shares that he eventually sold for more than $100,000 in profit in 2005.
According to the College Board, students borrowed $85 million in loans last year. According to research firm Student Marketmeasure, Student Loan Xpress accounted for nearly 39 percent of federal loan volume to undergrads at Columbia. The New York Times reports that students rarely comparison shop when choosing loan providers, often strictly relying on the preferred lenders list recommended by their universities.
Burt has denied any financial arrangement between him and Student Loan Xpress. Neither Charlow nor Thomas have released comments. Columbia officials have placed Charlow on paid leave pending a full review of the accusations.
