Friday, July 21, 2006

MyRichUncle Backlash

The Chronicle says the nation's financial aid administrators aren't happy that MyRichUncle took out an ad saying they have special relationships with lenders and don't always steer students toward the best deal.

"In its advertisement, MyRichUncle says some financial-aid administrators take "kickbacks" and "payola" from lenders who wish to become exclusive providers of loans on the administrators' campuses. None of these charges is particularly new. Over the past several years, Democratic lawmakers, student-loan watchdog groups, and even some loan-industry officials -- as well as the Education Department's own inspector general's office -- have urged the Education Department to be more aggressive in ensuring that lenders abide by rules that prohibit them from offering colleges inducements to secure applicants for federal loans. Despite these misgivings, department officials have largely refused to regulate in this area, leaving it up to the loan industry to police itself (The Chronicle, October 17, 2003, and November 28, 2003)."

Here's the kicker: Two financial aid advisors go on to say, well, even if MyRichUncle offers the best loan deal going right now, they won't tell students about it--because MRU hasn't established the right relationship.

""I told their representative not to visit me," said David R. Gelinas, who is the financial-aid director at the University of the South and also a member of [NASFAA]s board. "I told him that I found their approach to be offensive."
Walter O'Neill, assistant vice president for financial aid at Roosevelt University, agreed. "There's going to be a backlash against the company because they have shown that they don't have integrity or credibility.""

How is it showing a lack of integrity or credibility to publicize widely known and substantiated charges about an industry where you're trying to do something different? It's like a plumber in an ad saying, "some plumbers will overcharge you. They inflate the bill cause they're getting kickbacks from suppliers. Ask a plumber these questions to find out how independent they are. And trust us, cause we're telling you this."

1 comment:

Anya said...

It's true that most financial aid officers I've met absolutely are in it to help kids, and this ad isn't going to make their lives any easier. However the reality is that there are shady practices in this industry and that financial aid officers are the ones implementing them, simply by steering applicants toward their school's "preferred lenders". They're acting in a dual role--trying to serve both the school and the interest of the students, and those roles aren't always compatible.
A good analogy would be with doctors who take inducements from pharmaceutical companies. Yes they still want to help their patients but they also have incentives to prescribe as much Zantac (or whatever) as possible, and so they're no longer disinterested advocates for patients. You can say, well big Pharma's the real enemy, and yet doctors shouldn't be completely excused either.