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July 31, 2007

Financial Aid

Contract with Nelnet not renewed

The Alumni Association board maintains that all past actions were legal.

Story by: J. Blankenship

The Shorthorn staff

The Alumni Association no longer does business with Nelnet, one of the nation’s largest student lenders.

The association ceased contractual relations in the wake of subpoenas for alleged kickback schemes from the New York Attorney General, Andrew Cuomo.

“We just let it expire,” said Christina Cobb, Alumni Association executive director. “We’re no longer affiliated with Nelnet in any way.”

The New York attorney general’s investigation focuses on whether alumni groups received undisclosed payments from Nelnet in exchange for directing students and alumni to the company exclusively.

A Nelnet spokesman in Washington, D.C. said the company began terminating agreements across the nation this month, particularly those containing clauses about associations specifically recommending their lender services to members and students.

Cobb’s announcement came on the eve of a Dallas Morning News article published Monday stating the association received money from the lender for recommending the company’s loan consolidation services exclusively.

“I don’t know where or from whom that paper got their information,” said Theresa Berend, Alumni Association Board president. “Our contract with Nelnet, while the terms are confidential, merely allows us to offer Nelnet’s services as a member benefit for UT-Arlington alumni.”

Berend, an attorney, serves on the association’s board. Since May, she and Cobb have stated the association is trouble-free and within legal limitations.

The New York attorney general’s office subpoenaed the UT System and four of its alumni associations, including UTA’s, in May. They were part of 90 targeted across the nation. Barry Burgdorf, Vice Chancellor and general counsel, conducted internal investigations of UT System financial aid offices. He presented results at the May Board of Regents meeting, which included terminating the director of financial aid in Austin.

In June, Burgdorf’s office turned its investigation toward alumni associations. He didn’t present the results at the July Board of Regents meeting as initially planned. Anthony de Bruyn, UT System public affairs director, said Burgdorf now plans to present the findings at the August meeting. Alumni associations, as Section 501 nonprofit groups, are separate entities from the system that limit what Burgdorf’s office can do, he said.

The New York attorney general’s office is continuing investigations but hasn’t responded to calls or e-mails from The Shorthorn. According to its consumer alert Web site, the New York office is suing one university and one lender. Three of the nation’s largest lenders entered into agreements by signing codes of conduct with that state. Four universities also signed agreements and codes of conduct. One lender signed a discontinuance assurance.

The UT System signed a code of conduct with Texas and to date has made no agreements with New York or Nelnet, de Bruyn said.