Financial officer: SEMO doesn't benefit from loan companies

Southeast Missouri State University doesn't benefit financially from student loan companies, the school's top financial officer said Thursday, reacting to a widening probe of the student loan industry.

Kathy Mangels, vice president of business and finance at Southeast, said the school has a a code of ethics that "everyone understands."

The university prohibits employees in the school's financial aid office from receiving any compensation from student loan companies, she said.

An expanding investigation of the $85 billion student loan industry has found numerous financial arrangements between the nation's colleges and lenders. New York Attorney General Andrew Cuomo is heading the probe.

Investigators say lenders have provided all-expense-paid trips to exotic locations for college financial aid officers who then directed students to the lenders.

Investigators found that many colleges have established "preferred lender" lists and entered into revenue-sharing and other financial arrangements with those lenders. Some colleges have exclusive preferred-lender agreements with the companies.

So far, six schools, including the University of Pennsylvania and Syracuse University, have agreed to reimburse students a total of $3.27 million for inflated loan prices caused by revenue-sharing agreements, Cuomo said.

Within the past week, six financial aid officers at various schools and a federal Department of Education official were placed on leave after Cuomo's office said they received stock, consulting fees or other compensation from Student Loan Xpress.

The company was acquired by CIT Group Inc. in 2005.

Mangels said the company isn't on Southeast's recommended lender list. The list has four recommended lenders: Bank of America, Commerce Bank, US Bank and SmartFunds. The four are on the list because they are the four top lenders to Southeast students.

"Those were the lenders that had the most student-loan volume so they had most experience and good records," Mangels said.

Students are free to use other lenders if they want, she said.

The Missouri Higher Education Loan Authority works with various lenders. It purchases loans from initial lenders to provide lower interest rates for students, she said.

Mangels said she and other Southeast officials have read the news stories on the investigation. "We are keeping an eye on it," she said.

mbliss@semissourian.com

335-6611, extension 123