Executive Fraud Blog

Finding the best financial aid package is never easy. But experts say there are things students and families can do to minimize their debts and avoid problems.

1. Get free money first. Look for grants and scholarships before you assume debt, and don't be shy about asking financial aid staff for help.

2. Use cheaper federal loans before you turn to other forms of debt. Some lenders may encourage you to take out private loans that aren't backed by the U.S. government, but they're typically more expensive than Stafford or Perkins loans.

3. Know yourself. If you're unlikely to pay your bills on time every single month, seek loan discounts - for electronic payments or the waiving of origination and default fees - that don't disappear if you miss a payment.

4. Ask questions and read the fine print. Make sure all the benefits you've been promised will stay with the loan forever, even if it's sold to another company.

5. Make lenders fight for your business. Don't take the first offer you get - ask other lenders if they can beat it. Compare total costs over the life of the loan.

6. Ask other students and your financial aid office about customer service. Find out which lenders are easiest to reach and negotiate with when there's a problem.

7. Remember: You have choices. Be wary of lenders or aid staff who say you don't.

St. Petersburg Times
http://www.sptimes.com/2007/05/07/State/Who_s_picking_student.shtml

Student loan fraud has been investigated in the relationships between universities and large financial banks. The cause for concern is that certain universities have been accused of exclusively directing their students to lenders in exchange for revenue sharing opportunities or extravagent gifts related to their role in giving students higher rate loans. From a review of college arrangements with banks done by the St. Petersburg Times explains the following relationships:

- At Florida State University, the financial aid director sits on the advisory board of preferred lender Student Loan Xpress, which has seen nearly half of its board members suspended by their schools recently for allegedly accepting hefty consulting fees or owning stock.

- With thousands of competing lenders to choose from, Florida A&M University students were, until recently, directed to use one of two lenders based on the spelling of their last name.

- The Stetson University Law School financial aid director sits on the advisory board of a preferred lender that last year controlled 70 percent of the school's $31-million loan business. Now, officials say they will no longer accept free travel and lodging if the director attends further meetings.

The lenders and campus officials that are recently under the most criticism include:

FSU financial aid director Darryl Marshall has served for five years on that company's advisory board, and said he has accepted reimbursement for travel and lodging to attend three meetings.

Six other members of that board - including financial aid directors at the University of Texas, Columbia University and Johns Hopkins University - have been suspended by their schools for allegedly holding up to $100, 000 in stock or accepting fees of up to $80, 000 from the company.

Marshall said he was also reimbursed for two trips as an advisory board member for USA Funds, the nation's largest loan guarantor, and one trip for Elm Resources, a nonprofit run by lenders.

Student Loan Xpress is one of 11 preferred lenders at FSU. Last year, it did more business there - $27-million worth, in the form of more than 9, 000 federally backed loans - than any campus in the nation but one, according to federal reports compiled by the Student Marketmeasure data service.

These student loan fraud schemes seem to be very easy to conceal for these universities because they can claim to be only providing a convenience for their students but they should be held accountable for vouching for the their preferred lender. As the investigations continue it is likely that other fraud schemes will be uncovered.