The New York State Attorney General is investigating whether officials at Universities received illegal kickbacks from lenders. Although there's a NY Times article, the article in the Wall Street Journal better explains the kickback scheme.
Mr. Charlow, the associate dean of student affairs at Columbia, owned 7,500 shares and 2,500 warrants of Education Lending Group Inc., the parent of Student Loan Xpress, at the time of a September 2003 stock offering, Education Lending said in a Securities and Exchange Commission filing.
Lawrence Burt, associate vice president of student affairs and director of the office of student financial services at the University of Texas at Austin, is listed in the offering document as owning 1,500 shares and 500 warrants. So is Catherine Thomas, associate dean and director of financial aid at the University of Southern California.
New York state officials said Mr. Charlow made a total profit of at least $100,000 selling those shares in 2005. Comparable figures weren't available for Mr. Burt and Ms. Thomas. Mr. Charlow and Ms. Thomas couldn't be reached for comment. James Grant, a USC spokesman, said the school "will now review the information in the letter" from the attorney general "and respond."
Read the above carefully, because it states that the university officials owned shares and warrants in this company before a September 2003 stock offering. The shares, therefore, were direct grants and/or sales by the company and were not purchased in the public stock markets.
Are people shocked to discover that high level administrators at prestigious universities, including the Ivy League Columbia University, are greedy crooks? I'm not.
An anonymous poster at xoxohth.com wrote the following comment:
That's a pretty good scam, although not as good as charging $47k/year for college in the first place.