The newspapers, magazines, and online news community is still talking about the recent financial aid scandal in which some college aid officers may have been steering students to particular lenders in return for rewards of various kinds given to them and/or their institutions. Television news, at the moment, seems more focused on where Paris Hilton will be spending the next month or month and a half.
At least two or three chief financial aid officers have lost their jobs as a result of their actions, including the financial aid director at the University of Texas, who was apparently given stock in one of the lending companies under scrutiny. And, some universities have taken fairly serious public relations hits for accepting financial incentives from preferred lenders.
Investigations have brought to light at least three or four situations in which there were serious ethical violations, and many more situations in which individuals and/or institutions displayed glaringly poor judgement or lack of thought. But, overall, how widespread were the problems?
More on point, can students and their families be confident that college financial offices have their best interests at heart? In most cases, especially for families dealing with nonprofit institutions, the answer is an unqualified “yes”.
Lenders, like other business people (and educational and governmental institutions) court their constituents. Lenders sponsor luncheons and workshops for financial aid personnel. In some instances they sponsor campus events which benefit students and or institutional offices. And, they give away note pads, pens, and other office supplies. At least one lender assists colleges in creating virtual campus tours on their websites. I don’t have a problem with any of those things unless the lenders ask for or receive special treatment from the institutions. And, they seldom do.
In most cases, colleges that provide families with a preferred lender list…a list of lenders they recommend…do two things. They select for inclusion companies that offer families (in their opinion) the best overall combination of price and service. And, they make it very clear that families may select any lender they wish, including those who do not appear on the list.
“Best practice” financial aid offices review the preferred lender list annually and make changes when appropriate, list lenders in alphabetical order (and point out that fact on the list), and refrain from recommending a specific lender.
Choosing a lender is an important decision. Ask questions. Shop and compare. You may find a lender you like better than the lenders you find on a preferred list.
But, don’t spend too much time worrying about the financial aid officers you meet. The overwhelming number of them want what is best for students and families.