From Truthout:
By Rob Tricchinelli
Capital News Service
Thursday 06 September 2007
Washington - Right on the heels of the sub-prime mortgage debacle, which saw mortgage lenders providing predatory loans to people who could not afford them, it has been learned that a company attempted to buy itself favorable positioning in the highly profitable student loan business. A leading student loan company attempted to obtain special placement on the University of Maryland's preferred lender list last year, according to university officials and a government report released Tuesday.
Nelnet, based in Lincoln, Neb., tried in March 2006 to leverage its support of several university events - including $7,500 for "Maryland Day" - into being one of the companies recommended by the university for student loans. The attempt was rebuffed, university officials said.
Nelnet's actions were "perhaps the most egregious example" of a lender offering "donations or other funds in exchange for preferential treatment," the report by a U.S. Senate committee said, adding the request was rejected and other officials were notified.
An employee in the University of Maryland's office of development, which does fund-raising, came to Sarah Bauder, the director of financial aid, and said Nelnet wanted to be rated favorably for students seeking loans.
"Unbeknownst to me, Nelnet was working with our development office and our alumni office," said Bauder. "Development didn't know we had a lender list." She added that the employee approached her "innocently."
Bauder refused the request and notified the chief executive officer of Nelnet Education Services, David A. Bottegal. She also notified the office of University President C.D. "Dan" Mote.
Nelnet was one of 16 lenders, representing 72 percent of the nation's student loans, engaged in questionable practices, according to the report, which was prepared by Sen. Edward M. Kennedy's, D-Mass., staff, for the Senate Health, Education, Labor and Pensions Committee.
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