Emerson College Settles Student Loan Probe

Emerson College will pay $780,000 to settle complaints that it steered student loan applicants to companies that gave free trips and consulting contracts to the Boston school's staff.Massachusetts Attorney General Martha Coakley and New York Attorney General Andrew Cuomo announced a settlement Tuesday with Emerson College, which is the 28th U.S. school to pay a penalty in connection with a probe of the student loan industry.

"This idea they were possibly profiting off students' inability to get funding through them or through federal loans is kind of trashy." - Lauren Schumacher Recent Emerson College Graduate

The attorney general alleged that financial aid office employees received gifts and perks in exchange for pointing students toward certain lenders, who, in turn, charged high interest rates."They were operating, we find, with conflict of interest in their own best interest, steering students to loans that would provide other benefits to them," Coakley said. Investigators said that the college told students they should use certain "preferred" lenders, but didn't disclose that some of those companies had showered its financial aid staff with resort vacations, free meals, sports tickets and consulting fees -- as students paid higher than normal interest rates for the loans Emerson College said in a statement that it longer recommends specific lenders."We voluntarily made significant changes to our program," Emerson College spokesman Andy Tiedmann said. "Emerson no longer recommends lenders to students. Second, we have a strict code of conduct for financial aid officers."

"Emerson no longer recommends lenders to students. Second, we have a strict code of conduct for financial aid officers." - Andy Tiedmann Emerson College spokesman

Emerson's director of financial services, who allegedly got paid as a consultant and lobbyist for one of the lenders, was terminated two years ago after the investigation started. The school has since vowed to oversee the financial aid process better.Recent Emerson College graduate Lauren Schumacher said Emerson's "preferred lender" list made her suspicious when she was scrambling to scrape up more money for school."Of course I was skeptical," she said.So, she did her own research and got a loan on her own."This idea they were possibly profiting off students' inability to get funding through them or through federal loans is kind of trashy," Schumacher said.The attorney general claimed Emerson even made it difficult for students to borrow from Stafford lenders the school didn't recommend as "preferred." The $780,000 will be split between about 4,000 students with varying reimbursement amounts.More details links.....