The Office of Student Financial Services will stop recommending specific lenders to students seeking loans and will adopt a "College Loan Code of Conduct" proposed by the New York attorney general, the University said yesterday.
Attorney general Andrew Cuomo, who proposed the code, is currently investigating possible conflicts of interest at financial aid offices at a number of American universities, including Hopkins.
This new attention to business ethics follows a financial aid scandal centering on Ellen Frishberg, the director of Hopkins' Office of Student Financial Services, who had received over $60,000 from a preferred lender, Student Loan Xpress, for providing consulting services and receiving education reimbursement. Frishberg has since been placed on paid leave.
Frishberg reported during the course of the investigation that she has consulted for other companies in the past in addition to Student Loan Xpress, but the University did not disclose the names of those companies.
President William Brody said yesterday that the University remains committed to maintaining a financial aid program that is capable of meeting students' best interests while maintaining ethical standards.
But since the University has effectively banned any suggested lenders list, students have little guidance by which they can choose a lender. The University also announced that it will not re-establish a list of this sort until a "national consensus on standards for lists that are free of conflict of interest and serve the best interests of students" has been reached.
"At the moment, there's really no guidance that we can provide to students and their families," said Dennis O'Shea, Director of Communications and Public Affairs.
"We are sensitive to the fact that that is a problem - that families benefit from having guidance," he said. But until there is a national consensus that provides an ethical procedure that all financial aid offices might follow, the University will refrain from providing specific guidance regarding loans. They will, however, continue processing loans from whichever lender a student chooses.
"I hope that a national consensus comes about quickly," he added.
The University discovered two separate contracts whereby an unnamed university financial aid office placed a company on a lenders list as part of the agreement to provide loans to international students.
The University has said that a number of loan companies, including Student Loan Xpress, have paid for University employees' entertainment or meals. According to O'Shea, provisions of this sort would not be prohibited under the new code of conduct, as they could be deemed payments of "nominal value." Still, the University has not completely defined what "nominal value" will mean.
The new code of conduct is a list of guidelines by which each of the seven financial aid offices at the University will abide. The list prohibits university employees from taking anything of "more than nominal value from any lending institution"; prohibits lenders from paying to be on a school's preferred lender list; prohibits compensation for being on any advisory board; and insists upon full disclosure of the criteria by which any lender is placed on a preferred list, among other stipulations.
Frishberg's dealings with Student Loan Xpress appear to violate several of these stipulations, but according to O'Shea, the investigation will only consider university policies that existed previously.
"We're not talking about a retroactive imposition of policy," he said.
As the investigation is still ongoing, a number of questions remain unanswered. Frishberg's future with Hopkins is still unclear, as she continues to be on paid leave. Whatever happens, the University intends to continue cooperating with Cuomo's office.
According to O'Shea, the University told Cuomo that the newly released information was merely a "preliminary production of the kinds of documents that he was asking for." The University will continue looking for information that will bring more clarity to the actions of officials in all of the seven independently operated offices of student financial services within the University.
With the amount of cooperation that the investigation requires, the timeline is unclear at this time.
The investigation was formed when the University was made aware that Frishberg had acted as a consultant and served on the advisory board for Student Loan Xpress, which, according to an April 9 letter from Cuomo's office, provides loans to 40 percent of Hopkins students. She received over $40,000 from the company in consulting payments and over $20,000 to help pay for her education at the University of Pennsylvania. Her consulting relationship ended in 2005.
The University's investigation has not brought to light any evidence that a Hopkins official had prior knowledge of Frishberg's consulting fees or of tuition payments between 2002 and 2006, according to a statement Wednesday.
The University also said that they have found no evidence that any lender made a direct payment to Hopkins in return for placement on a preferred list.
The Office of Student Financial Services was unavailable for comment.
