The Times Weighs In On The Loan Scandal

These cases show what lenders will do to win a slice of the business — last year students took out $85 billion in loans — and the all-too-frequent willingness of universities to go along. Financial aid officers are offered gifts and trips, and universities are offered hundreds of thousands of dollars in payments, if they place a company on their list of preferred lenders that most students use when looking for loans. Universities have also been offered large payments to switch from the government’s student loan program to private lenders whose huge profits are based in part on government subsidies.

This program is clearly in need of serious and immediate reform. For starters, Congress needs to make it illegal for colleges and universities to accept anything of value from lenders. It should also require universities to choose preferred lenders through an open process that guarantees the best rates and treatment for student borrowers.