Spring Break
Drexel named in loan scandal
University receives over $100,000 per year from "preferred lenders."
Noah Cohen
Issue date: 4/6/07 Section: News
The University has been named by the New York Attorney General's office as receiving "kickbacks" from the student loan industry as part of a probe into the practice of schools recommending lenders to students.
According the Attorney General's investigation, the University received $100,000 per year from the lender Educational Financial Partners. In exchange, the University recommended EFP as the "sole preferred lender" for students seeking financial aid.
"The Attorney General's office will be filing suit over deceptive business practices in the company's student loan business. The suit is the first filed in a nationwide investigation into the college loan industry," according to a press release from the New York Attorney General, Andrew Cuomo.
"A preferred lender ought to mean that the lender is preferred by students for its low rates, not by schools for its kickbacks," Cuomo said.
Since the Attorney General's Mar. 22 announcement several schools named in the investigation have said they will return the money received from lenders.
University officials maintain the money is being used for legitimate purposes.
"A revenue reinvestment that is being used for scholarships is really not a kickback," said Executive Director of Financial Aid Melissa Englund.
Englund explained that the money received from EFP is put in a "special account" and is used for an "extraordinary change in circumstances" that could occur in students lives.
Englund said 43 students have used the funds to help them continue their education while dealing with events ranging from a family death to severe illness.
"That is a designated scholarship account so it will never be removed from that, if we don't use all the money in a particular year it will be rolled over to the next year" said Englund.
The money received from EFP can only be used for these special purpose financial aid situations explained Englund.
"It can never be taken out for another use," she added.
According the Attorney General's investigation, the University received $100,000 per year from the lender Educational Financial Partners. In exchange, the University recommended EFP as the "sole preferred lender" for students seeking financial aid.
"The Attorney General's office will be filing suit over deceptive business practices in the company's student loan business. The suit is the first filed in a nationwide investigation into the college loan industry," according to a press release from the New York Attorney General, Andrew Cuomo.
"A preferred lender ought to mean that the lender is preferred by students for its low rates, not by schools for its kickbacks," Cuomo said.
Since the Attorney General's Mar. 22 announcement several schools named in the investigation have said they will return the money received from lenders.
University officials maintain the money is being used for legitimate purposes.
"A revenue reinvestment that is being used for scholarships is really not a kickback," said Executive Director of Financial Aid Melissa Englund.
Englund explained that the money received from EFP is put in a "special account" and is used for an "extraordinary change in circumstances" that could occur in students lives.
Englund said 43 students have used the funds to help them continue their education while dealing with events ranging from a family death to severe illness.
"That is a designated scholarship account so it will never be removed from that, if we don't use all the money in a particular year it will be rolled over to the next year" said Englund.
The money received from EFP can only be used for these special purpose financial aid situations explained Englund.
"It can never be taken out for another use," she added.
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