Roundup: Week of August 13 - August 17

Study Abroad Becomes Next Target of Cuomo Probe

Many of the same improprieties that have been uncovered in the student loan industry are also occurring between colleges and companies that offer study abroad programs, according to The New York Times. In a story on Monday, the Times reported that corporations such as the American Institute for Foreign Study (AFIS) have been offering college officials fee kickbacks, free personal overseas travel for enrolling students, and cash incentives to accept academic credit only from their programs. These arrangements, which bear a striking resemblance to dealings between student loan providers and college officials, prompted New York Attorney General Andrew Cuomo to expand his ongoing investigation of college corruption into the study abroad industry. Cuomos office delivered subpoenas to AFIS and four other study abroad companies on Wednesday and a senior lawyer told the Times that the investigation is unlikely to stop there. "As our investigation continues to expand," said Benjamin Lawsky, Mr. Cuomos Deputy Chief of Staff, "we are finding that more and more vendors who do business on campus are there because of the cozy relationships they have developed with the schools. The question is whether those relationships help the schools at the expense of students."

Doubts Remain, but Sallie Mae Shareholders Approve Buyout

Nearly 70 percent of Sallie Mae shareholders voted Wednesday to accept a $25 billion buyout offer, though some doubts remain as to whether the purchase of the giant student loan provider will go through. The deal, which was offered by a consortium of banks and private equity firms, would pay stockholders $60 per share. Yet shares were trading at under $46 on Thursday, indicating investors may not believe Sallie Maes claim last week that the buyout was "highly unlikely" to fail. Concerns about the buyout first arose following the passage of Congressional legislation to trim student loan subsidies, which would reduce, but not eliminate, Sallie Maes profit margin. We at Higher Ed Watch expect the buyout to go through.

Eastern Michigan Returns Donations from Donors Affiliated with Sallie Mae

Concerns over apparent conflicts of interest within the student loan industry led Eastern Michigan University to return $161,000 it received from a foundation associated with Sallie Mae, the Ann Arbor News reported Saturday. EMU, which recently fired its president over an alleged cover-up involving a students murder, said the returned funds are the unused portion of $310,000 in donations the school had received for scholarship aid. In addition, EMU also announced that it will likely end a deal with Sallie Mae in which the lender provides a financial aid calling center for students. The calling center agreement is scheduled to end next summer, but EMU officials speculated that they could try to switch to a different vendor at an earlier date. Sallie Mae had been listed as an EMU preferred lender.