College Officials Owned Stock in Student Loan Lenders

Conflict!

Of!

Interest!

Seriously: if you’re a federal Education Department official, you’ve gotta not be secret about the $100,000 in student loan stock you own.  Because if you are and you did: you’re now under investigation.  (It also means your name is probably Matteo Fontana.)

Fontana, according to a September 2003 filing with the SEC, had at least 10,500 shares of Education Lending Group Inc., the former parent company of Student Loan Xpress. The shares were valued around $9.50 each at the time, according to New York Attorney General Andrew Cuomo’s office, which is leading the investigation.

That investigation is finding a mess of conflict of interest issues.  Numerous arrangements are now coming to light that show extravagant benefits to schools and lenders at the expense of students.

According to the AP, The SEC records show David Charlow, the associate dean of student affairs at Columbia University, owned 7,500 shares of Education Lending Group’s stock and owned 2,500 stock warrants at the time of the stock prospectus. Cuomo’s office said Charlow sold the 7,500 shares for about $9.50 each and in 2005 sold more of the securities for a total profit of more than $100,000.

Cuomo’s office is investigating several other lenders, including the nation’s largest student-loan provider, SLM Corp. — commonly known as Sallie Mae. Others include Citibank, Nelnet Inc., Education Finance Partners Inc., EduCap Inc. and the College Board.