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Financial Aid Officers Benefit from Student Loans, Probe Reveals

Financial aid officers at several high-profile colleges were put on leave after a probe revealed that they were receiving stock options, kickbacks and all-expense-paid trips from a preferred student loan lender. The NewsHour talks to an author who covers student debt.

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  • GWEN IFILL:

    The $85 billion student loan industry is under fire for questionable financial dealings between some colleges and lenders. Financial aid officers at several schools, including Johns Hopkins and Columbia Universities, were put on leave after a New York state probe found a lender was giving out stock grants, kickbacks, fees, and all-expense-paid trips.

    The company in question, Student Loan Xpress, has been on these schools' preferred lender lists. For more on this story, we turn to freelance writer Anya Kamenetz, author of the book "Generation Debt."

    Anya, welcome.

    ANYA KAMENETZ, Author, "Generation Debt": Thanks for having me.

  • GWEN IFILL:

    So explain the arrangements that sprung up between these colleges and these lenders and the students involved.

  • ANYA KAMENETZ:

    Well, in theory, as a college student, you have the right to borrow your federal student loans from any one of the dozens of lenders on the market. But in practice, the way it works is that college students go to the financial aid offices, who put together a package of student aid, loans, grants, and they often provide the student a list of the preferred lenders that that college works with.

    In theory, once again, these preferred lenders are on that list because they offer the best deals to students. But, in reality, as we can see, the deals are really going on between the financial aid offices and the lenders.

  • GWEN IFILL:

    So who cuts the deals? Is it the college themselves or is it just something that these financial aid officers are allowed to do on their own?

  • ANYA KAMENETZ:

    We are seeing both. We're seeing situations where colleges as a whole are profiting. Their budgets are being swallowed by the loans that are being taken out. We're also seeing situations where financial aid officers are accepting inducements from small inducements, like a ticket to a game, to big inducements, like sending someone to graduate school.

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