The director of the JHU Office of Student Financial Services has been put on paid leave in the wake of allegations that she received money from Student Loan Xpress, one of the University's preferred lenders. New York State Attorney General Andrew Cuomo, who has been investigating similar conflicts of interest at other universities, claims that Ellen Frishberg received $43,000 from Student Loan Xpress in consulting payments and another $22,000 to help pay for her doctoral studies at the University of Pennsylvania between August 2002 and January 2004. Her consulting relationship with the company ended in 2005. The University received a phone call on Monday morning from CIT Group, the parent company of Student Loan Xpress, outlining Frishberg's dealings with the company and informing the University that they would be turning the information over to Cuomo's office. The University received a letter from the attorney general's office later that afternoon.In the interim, University officials made the decision to place Frishberg on administrative leave.
"Questions have been raised that can only be resolved by a more thorough inquiry. It seems prudent, during that period o time when the inquiry is under way, to allow Dr. Frishberg to focus on that rather than on the day to day running of the office," said Dennis O'Shea, Director of Communications and Public Affairs.
The letter from Cuomo's office claimed that University-wide, 40 percent of students who receive financial aid use Student Loan Xpress. The University neither confirmed nor denied that claim. Cuomo has been investigating the company for allegedly paying kickbacks to school officials to get onto their preferred lenders lists. Officials at the University of Southern California, the University of Texas at Austin and Columbia University were all suspended following allegations that they held stock in the company while it was on the preferred lenders list. An employee in the Department of Education was also put on leave following the report that he owned over $100,000 worth of stock in the former parent company of Student Loan Xpress, Education Lending Group Inc. CIT purchased Student Loan Xpress in 2005. According to the New York Times, the company approached Frishberg in 2002, enticing her to purchase stock, but she refused. "I told them it was not allowed in my position," she told the Times. Three officials from Student Loan Xpress were also suspended Monday in light of the recent allegations. "As a company that holds itself to the highest standards of business ethics and integrity, we take the allegations raised by Attorney General Cuomo very seriously," said Jeffrey M. Peek, chairman and chief executive of CIT, in the New York Times. O'Shea said that Hopkins is cooperating with the Attorney General's office.According to O'Shea, the student financial services offices compiles a list of lending institutions that it recommends for students to use -- "companies that the University and its students have had good experiences with in the past." The criteria that Student Financial Services uses to establish the preferred list are extensive. They look for companies that have the most competitive rates, dedicated call centers, loan flexibility and companies that will lend to borrowers with less than perfect credit. "We're looking for lenders that provide good service to our students and their families," O'Shea said. The Baltimore Sun quoted Frishberg last week saying, "We've done a scanning of the marketplace, who's good at service and who gives good benefits. And now we're getting in trouble for this." It is not clear, at this point, whether Frishberg's dealings would have been explicitly prohibited by the University, but at least one University policy makes them appear that way. The "Statement of Behavior in Contractual Relationships," within University-wide policies posted online, states that the "University prohibits vendors from offering its faculty and staff any incentives, gifts or gratuities in exchange for conducting business." It is unclear at this time whether the monies she received for consulting or the funding for her doctoral education would fall into that category. Cuomo's office has not yet established whether the actions between the university and Student Loan Xpress were illegal, but they are pursuing it as a conflict of interest situation, which might have implications in the arena of lawful business practices. The policy goes on to express that faculty and staff should "avoid having any conflict of interest in directing business to any vendor. Our employees are to have no personal interest in suggesting or specifying vendors." O'Shea suggested that this policy "might" be included in the University's investigation. The Attorney General's office also alleged that Student Loan Xpress paid $80,000 to a consulting company run by the dean of financial aid at Widener University in Pennsylvania. Cuomo's office also said that the director of financial aid at Capella University, Timothy Lehmann, received over $13,000 in consulting fees from Student Loan Xpress.
