Hopkins students choosing financial aid providers can no longer receive recommendations from the Office of Student Financial Services, which is still looking for a new director after the resignation of Ellen Frishberg nearly four months ago.
The University reached a settlement on June 14 in the investigation conducted by the U.S. Senate into conflicts of interest between financial aid directors and their preferred loan companies.
On May 18, after spending over a month on administrative leave, Frishberg resigned, stating that she considered her departure to be "in the best interest of her family, the University and its students and their parents."
Soon after, it became apparent that Frishberg had received at least $130,000 in consulting payments from a number of lending companies over her tenure at Hopkins - a number significantly higher than the $65,000 initially reported.
In an e-mail to the News-Letter, Frishberg said that she "never intended to do anything that would be perceived as harmful" and has "always acted in good faith and with integrity," sending her best wishes to future generations of Hopkins students and their families.
In April the University suspended all lists of recommended lenders when it was made aware that Frishberg had received over $65,000 in consulting and tuition payments from Student Loan Xpress (SLX), a student loan company that was on the preferred lender list.
The University immediately eliminated all lists of lenders, citing that it would refrain from providing any recommended list of lenders to students and parents until there was a national consensus on how they should be impartially formed.
"Although it is clear that one University employee violated University policy in her relationships with student loan companies, Johns Hopkins as an institution has always stood for a financial aid program that meets the highest ethical standards," President William Brody said in a press release.
A list of Frishberg's financial records, as reported by the office of Sen. Edward M. Kennedy (D-Mass.) shows that she had accepted more than $130,000 from a variety of consulting jobs with lending companies during her 18 years with Hopkins. The companies included SLX, Collegiate Funding Services, U.S. Department of Education, Campus Direct, American Express and Student Loan Processors Inc., among others.
The University found that Frishberg failed to disclose paid consulting work with American Express when it was listed as a preferred lender for the school, resulting in at least one other violation of the University's conflict of interest policy.
Frishberg had revealed some approved advisory committee work to the University in the past.
The Washington Post obtained an e-mail from Frishberg to a lending company called Campus Direct in March, which paid her over $13,000. In it, she mourned the new attention that was being paid to Financial Aid offices across the country, saying "This is no longer the fun and games we have come to know and love."
The investigation and agreement
In the agreement with New York Attorney General Andrew Cuomo's office, termed "Agreement on Code of Conduct," the University agreed to pay $562,000 to Cuomo's fund for educating students and families about the financial aid process. The University has said that it will give an equal amount to the cause of educating, benefiting and assisting Maryland high school students in the same process.
The University also agreed to adopt an extensive code of conduct, which requires annual training for financial aid officers, annual certification that they are adhering to the new Code of Conduct, disclosure of anything valuable that they receive from a student loan company and guidelines for providing a list of recommended lenders, among other requirements.
According to the agreement with the New York State Attorney General's office, the University chose to settle the investigation without admitting to a significant number of their alleged findings.
Although Cuomo claims that the University has been in violation of New York law, Hopkins maintains that the allegations are untrue. Still, it has agreed to a number of provisions, including annual reports to the Attorneys General of New York and Maryland on its student lending practices, for five years. In a statement released by the University, Brody said that the Agreement on Code of Conduct would allow the Hopkins to avoid costly legal proceedings.
Before this Code of Conduct was created, the University had only a broad conflict of interest policy that applied to all employees within Hopkins.
The University began its investigation of Frishberg in early April when they received a phone call from CIT Group, the parent company of SLX, explaining the extent of Frishberg's relationship with the company. CIT Group also made the University aware that they would be providing the same information to Cuomo's office. The University placed Frishberg on paid administrative leave early on in the investigation.
The University received a letter explaining Cuomo's intent to investigate the matter later that day.
Within the University, the financial aid investigation was conducted by the Office of the General Counsel, Hopkins' legal body, directed by Stephen Dunham, vice president of the General Counsel. The agreement between Cuomo and Hopkins said that the University had cooperated fully with the Attorney General's office, and the Senate Health, Education, Labor and Pensions committee.
Legislation intended to prevent conflicts of interest such as Frishberg's was passed by the House in May.
Columbia University fired their financial aid director David Charlow on May 21, after it was discovered that he held over $100,000 of stock in SLX.
The next steps for Hopkins
Although the Office of Student Financial Services is still without a recommend lenders list, the Code of Conduct does outline some standards for the creation of any university-issued list in the future.
The agreement with Cuomo's office specifically prohibits the use of any preferred lender lists "until the national debate moves toward a consensus on best practices and the university is satisfied that its own processes and criteria meet the highest standards of conduct and are free of any possible conflicts of interest."
This lack of recommended lenders leaves students with little direction for an indefinite period of time. The Office of Student Financial Services is currently suggesting that prospective borrowers simply enter "student loans" into a search engine to find potential lenders.
"We are not prohibited from providing lender lists in the future; we are developing policies and procedures to govern the creation and maintenance of such lists if we decide to provide them," said William Conley, dean of Enrollment and Academic Services and interim director of Student Financial Services.
The University maintains that there is no evidence that any student or parent borrower was harmed by Frishberg's conflict of interest. The University has made it clear that it considers SLX, which Cuomo's office has reported lends to about 40 percent of Hopkins undergraduates, provides quality service and low rates.
"It was the manner of how they may have gotten on preferred lists that was in question," Conley said.
Hopkins is actively searching for Frishberg's replacement. The recently re-worked job description cites that all candidates must have "unquestioned personal and professional ethical standards." Conley hopes to have a new director hired sometime between November and January. Until that time, Conley is to remain the interim director, while leaning heavily on Benedict Dorsey and Tom McDermott, two Senior Associate Directors.
All of the staff members in the office who worked under Frishberg remain.
