Scams in Student Loans and Study Abroad – Should You Care?

In August, we found out that financial aid offices at universities were getting paid by student loan providers for creating a situation in which prospective students saw limited loan options. Later in the month, one of my favorite New York Times investigative reporters, Diane Jean Schemo, wrote about a similar market-fixing situation among popular “study abroad” programs. In some cases, it is charged that colleges received cash rebates for restricting a student’s choice of international programs to the chosen few. While the office of the New York Attorney General investigates these alleged misdeeds, the major industry trade association is starting to make noise about writing guidelines and self-regulation.

The Blue Lake take on it:
A victimless crime? I don’t think so. Student loans and study-abroad programs seem like “good” things – all “good” parents want their child to get a higher education, and if the university has hand-picked these providers of student loans and semesters in Europe, why should they challenge them? Yes, there are much more serious white-collar crimes out there, but it really gets under the skin when the deception is practiced by those in the education arena. If you want to read about what happens when students are steered toward private loans with hard-to-discern interest rates, Schemo uncovered some gems. Maybe it’s time we realize that higher education, like health care, is an industry that has long since moved on from its “not for profit” roots.