Nixon continues loan inquiry
Wash U. in St. Louis has agreed to a 'code of conduct' about loan practices.
Published May 4, 2007
During the past month, student-loan practices have been in the news at an unusually high rate.
Student-loan officials nationwide are taking heat because of conflicts of interest with private lenders.
In addition, Sallie Mae, once a student-loan giant, was sold to JP Morgan Chase & Co. and Bank of America.
New York Attorney General Andrew Cuomo spurred investigations into the lenders.
His inquiry also led his Missouri counterpart, Jay Nixon, to pursue a similar investigation.
UM system spokesman Scott Charton declined to comment on the university's specific student-loan practices, instead deferring to Stephen Lehmkuhle, UM system vice president of academic affairs.
"We're certainly cooperating with the Missouri attorney general," Charton said.
"We believe that all in all, everything we've done is to help the students," he said.
Lehmkuhle, who was traveling on Thursday, was unavailable for comment.
In a previous interview, Lehmkuhle said Nixon's and Cuomo's investigation criteria are virtually identical.
He also noted that none of the UM system's financial aid directors serve on paid positions at private loan companies, which is what put officials at the University of Texas and the University of Southern California in hot water.
Those same companies were on the schools' preferred lender lists that many students choose from when deciding on a loan.
On April 23, Nixon's office announced that it had come to an agreement with Washington University in St. Louis about a code of conduct that prohibits the school from accepting anything of value from loan companies.
Cuomo has reached similar agreements with several large loan companies and more than 20 colleges and universities nationwide.
Nixon's office did not return several phone calls about a possible similar agreement with the UM system, though no agreement has been announced.
In addition, the sale of Sallie Mae also raised questions about the viability of the proposed asset sale of the Missouri Higher Education Loan Authority.
Sen. Chuck Graham, D-Columbia, said Sallie Mae's sale could have adverse consequences on the plan.
"The new owners of Sallie Mae will somehow have to pay for this massive buyout, probably by increasing rates on student loans," Graham stated in a news release. "Most of the loans already sold by MOHELA to fund the governor's scheme were sold to Sallie Mae, and it is likely that additional loans could be sold to the new Sallie Mae."
Rep. Carl Bearden, R-St. Charles, a member of the House Higher Education Committee, supports the MOHELA plan.
"I don't believe the sale of Sallie Mae will negatively impact the MOHELA plan at all," Bearden said.
Bearden said MOHELA has already sold more than $200 million in assets, and the companies that acquired those loans were required to operate under similar parameters as MOHELA, including offering loan forgiveness.
The Senate passed the plan, part of an omnibus higher-education bill, last week.
The bill passed out of committee Tuesday and was given a two-hour time limit for debate in the full House.
