This article brought a smile to face. Apparently, the Government woke up and said, "Where's my money?" and the scuzzy lenders in a multitude of states are saying, "Baby, I got cha money." Joking. The Nonprofit Lenders from numerous many states got a lot of explaining to do and they don't have the federally subsidized money anymore. They gave it out like sample crack rocks on the middle school playground.
The laundry list of misdeeds follows:
1. An Iowa Nonprofit Student Lender would pay cash to an alumni association for "steer[ing] students to the nonprofit's loans" in the form of "questionable executive compensation and perks, deceptive advertising and tens of millions of dollars in unwarranted federal subsidies."
2. The same Iowa Nonprofit paid 50 colleges $1.5 million from 2002 to 2007 "to reimburse colleges for administrative costs associated with counseling borrowers, certifying loan applications and disbursing its private loans" which presents a "a potential conflict of interest between their pecuniary interests and the best interests of prospective borrowers."
3. A Rhode Island Nonprofit sold loans to a For-Profit Loan Giant, Nelnet, but allowed Nelnet the right to issue the loans under the Rhode Island Nonprofit's name. With RI's name, Nelnet opened up a College Planning Center which "provided free financial aid advice, often encouraged students to take out Nelnet loans. But it did not identify its affiliation with the for-profit to students... In fact, it continued to call itself 'a free resource offered by the Rhode Island Student Loan Authority' in marketing materials." The Treasurer of Rhode Island, aka Captain Obvious, says that a nonprofit should be accountable to the people of Rhode Island and not to an out-of-state loan provider.
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