Thursday, February 26, 2009

Shooting The Loan Wolves

Via Ezra, Dana Goldstein tells us about something nice in Obama's budget: "The administration wants to originate all student loans in the direct lending program, cutting out wasteful middle-men."

This is good news, especially after big scandals in which private lenders were bribing college officials to steer students towards overpriced loans. I remember this from the Daily Texan, back when I was in Austin, and it's just embarrassing:

UT's Office of Student Financial Services accepted steak house dinners, after-work happy hours, ice cream carts and goodie buckets from lenders vying to keep or obtain a spot on the University's preferred lender list.

According to documents obtained through an open records request, the financial aid office used "treats" as a unit of measurement in preferred-lender list analysis. The documents also indicate that the financial aid office prefers for those lenders to have a strong "lender presence" in the office.

"Treats" was one of the criteria? How did anyone think that was okay? When ordinary crooked people take bribes, they have the decency to do it in secret. Well, good on Obama for ending these scams permanently. Nifty title pun stolen from Jon Chait's article on the topic.
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