Wednesday, April 11, 2007

How Corruption Works- A seat at the table

The Wall St Journal (paywall) ran a story today, sent to me by a smart reader, reporting that the National Association of Student Financial Aid Administrators
in 2003 considered and rejected a policy of a $50 cap on gifts from lenders to financial aid officers. This failure of self policing , they suggest, came because NASFAA has lots of lender-members and also enjoys the lavish sponsorship of lenders at its annual conference. NASFAA counters lamely on its website that "student loan lenders have been members of the National Association of Student Financial Aid Administrators (NASFAA) almost since its inception in 1966."

This gets you off the hook how?

A really thoughtful article on Inside Higher Ed last week talked to lots of financial aid administrators about how they deal with lender swag and other conflicts of interest. Craig Munier is a leader of the National Direct Student Loan Coalition , a coalition of public university financial aid administrators which promotes the cheaper of the two federal loan programs as a better option for students. Though for some reason the article doesn't mention this affiliation:

"Craig Munier, director of financial aid at the University of Nebraska at Lincoln, said that he has “deep reservations” about how closely intertwined the financial aid world has become with the lending industry. He has been urging the National Association of Student Financial Aid Administrators to stop letting lending officials join the group and to stop letting the companies sponsor its events. “We should have emancipated ourselves,” Munier said. “Even if those contributions and financial support didn’t sway our decisions, it gives the appearance that it may have.”

Munier is also the member of a small group of public university financial aid officers. That group meets annually — with no real budget and no outside support — and Munier said that the discussions focus on how to help students. Student loans may be part of the equation, but he said he has noticed that when aid officials aren’t worried about making association sponsors feel included, much more of the discussion is about aid programs.

“When I go to NASFAA, it will be nearly impossible for me to find a table at lunch where at least one or more people from the industry are not seated at the table, so the conversation invariably feels obligated to include that private sector, and I would love to discuss lots of things that aren’t about banks and lending,” he said."

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