Monday, April 02, 2007

Student loan hijinks, the joke may be on you.

AMERICAblog has a troubling look at the outsourcing of financial advising, ie student loan support, to loan providers. Something to note for all parents, and students.

Good grief. At a minimum, students and their families ought to know who they are speaking with when phoning what they believe is a university help desk. Anyone who is unable to see the gross conflict of interest with this relationship better think again.

The telephone number looks like any other university extension. And when students call with questions about financial aid, the recorded voice at the other end says, "Thank you for calling Texas Tech University's student financial center."

But what is remarkable about the center is not so much that it is actually located hundreds of miles away from Texas Tech's Lubbock campus. It is that the people giving advice are not university employees at all -- instead they work for Nelnet, a company that made more than $68 million last year off of student loans.

Nelnet's role staffing the help line -- which is not disclosed to callers -- is a window into the often hidden relationships between loan companies and the colleges that students rely on for advice about how to finance their schooling. Nelnet is one of several lenders that the university recommends to its students, though it is not among its 10 largest lenders.


It is worth being aware of potential incestuous business partnerships, and prepping your kids to be wise about the possibility.

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