Let the Sunshine In

New York State Attorney General Andrew Cuomo cut a deal this week with Citibank and five colleges regarding his investigation of student loan industry practices. Citibank will contribute $2 million to an education fund for student loan borrowers and families. Fordham, NYU, St. John's, Syracuse, and the University of Pennsylvania will provide over $3.2 million to students who received loans from companies that paid the relevant universities to steer students their way. Plus, the players will adopt a new code of conduct regarding their relationships with lenders. In return, Cuomo will call off his investigators from further looking into the settlements parties.

Cuomos announced settlement covers a small part of the New York State Attorney General Offices investigation into higher education and student loan industry relationships. The larger investigation continues. It may even be strengthened given that tje parties to the settlement will share information with the Attorney General. Notably the settlement still leaves exposed the nations largest student loan provider, Sallie Mae, and some of New York States largest universities in terms of student loan volume.

In fact, the book is far from closed in terms of public investigations into the student loan industry overall. A series of investigations are pending. Theres the Minnesotas Attorney Generals investigation into college-lender relationships. There are the House and Senate Education Committee investigations into the same. Theres the House Financial Services Committees investigation into Sallie Mae Chairman Al Lords fortuitous $18 million stock sale just days before President Bush unexpectedly proposed to whack student loan bank subsidies across the board. And finally, theres the Department of Educations Inspector Generals investigation into the Pennsylvania Higher Education Assistance Authority (PHEAA).

Full disclosure to all of the relevant investigators and the public would speed up the process of restoring a measure of the student loan industrys integrity and frankly, the assaulted integrity of some in the higher education community as well. In that spirit, we have some unsolicited suggestions for disclosure.

• Sallie Mae should disclose to Mr. Cuomo and others the list of colleges with which it has loan consolidation arrangements.
• Colleges "sharing revenues" with lenders should disclose how they are using the money generated, especially those colleges that also participate in "enrollment management" practices that can result in a shifting of institutional grant aid away from financially needy families and to "merit aid."
• PHEAA should disclose how much of its revenue especially that which has been spent extravagantly derives from "9.5 percent loan" payments and exceeds levels claimed prior to 2001.
• The Department of Education should disclose who was responsible for overturning a 2002 program review that would have ended the illegal 9.5 loan scandal just after it started.
• The University of Nebraska at Lincoln should disclose how the Nebraska University Foundation came to own so much stock in Nelnet, its chosen lender for graduate and professional students, how much the Foundation profited though Nelnet stock sales, and how much the foundation provides in compensation and benefits to officials who advocated the selection of Nelnet.
• Nelnet and Sallie Mae subsidiary Noel-Levitz should disclose their enrollment management client lists, along with before and after loan volume at those client institutions.

And finally,

• Associations of college officials and higher education institutions should disclose if theyve received financial support from for-profit lenders and how much financial support theyve received.

No other globally competitive country relies so heavily on for-profit lenders for higher education access and degree completion as the United States. Rather than dragging out, or worse, attempting to thwart government investigations, it is in the nations best interest for higher education finance participants to disclose voluntarily as much relevant public policy information as possible.

Disclosure might not be enough to solve deeper structural problems, but a little sunshine almost never hurts.