College Financial Aid "Preferred Lender" Relationships Investigated

This is the latest. Looks like the educational funding system is going to get an overhaul in the form of a legislation package from Congress stipulating boundaries for contact and compensation.

Cuomo said he suspects "dozens" of financial aid officers around the country have similar arrangements that he has called deceptive, unethical and at times, illegal.

"We have demonstrated this is not just the exception," he said. "This is the rule."

Cuomo said the arrangements are particularly predatory because of the relationship between students and the colleges they pick.

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Congressional Action Pending

A developing scandal over ties between the student loan industry and college financial aid officers is adding momentum to a congressional push to overhaul the system for college loans. Members of Congress say new rules, being pushed by New York Attorney General Andrew Cuomo, on how loan companies deal with campuses should be applied nationwide.
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Colleges Settle or Face Lawsuits

"This investigation is a two front battle: lenders and schools," Cuomo said. "We have proceeded against lenders and now we are proceeding against schools. There is no reason for a school not to adopt the Code of Conduct," Cuomo said. "This office has been clear to schools: settle or we will commence litigation. Either way we will get justice for students."
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My sincere hope is for meaningful reform of the student loan system, and any financial settlement or fines paid as a result of litigation be returned to needy students, preferably the ones ripped off by the system to begin with.

Education Department Official Steps Down

The head of the Education Department's student loan office is stepping down amid growing criticism that the agency has been lax in overseeing the student loan industry.

Theresa Shaw is leaving her post as chief operating officer of the Federal Student Aid office, a job that she has held since 2002, the department said in a statement.

Shaw previously worked at student loan giant Sallie Mae, also known as SLM Corp. Critics in Congress and student advocates have complained that the department has too many people with ties to the student loan industry in charge of overseeing that industry.

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This pattern of industry insiders becoming government officials, and vice versa is prevalent. Take Dick Cheney and his Halliburton connections, for instance. If Ms. Shaw's activities are cause for her resignation, then how much more so his?

I think this practice is immoral and unethical, a perversion and diversion of the political process from reflecting the will of the people to reflecting the will of corporate lobbyists and the wealthy few. People who serve in government must be watchdogs of the industries they oversee, not bed-fellows. Laws against government/industry collusion need to be enacted, and those on the books need to be enforced. All loopholes must be closed.