Student loan mess is called pervasive

Gifts and payoffs to universities and their officials by student lenders were far more pervasive than had been disclosed and in some cases were demanded by university officials themselves in exchange for promoting lenders to students, according to a Senate report on the student loan industry issued Thursday.

The report, released by Sen. Edward M. Kennedy, D-Mass., the chairman of the Education Committee, drew new colleges into the loan scandal. It also revealed an array of aggressive marketing practices by lenders, many of which, the report suggested, were unethical and possibly illegal because they involved quid pro quos.

"It is clear that the problem is systemic and cannot be isolated to a few 'problem' lenders or schools," the report concluded.

The report was released as the New York attorney general, Andrew M. Cuomo, announced that Johns Hopkins University had agreed to five years of monitoring and to pay $1.1 million to settle an investigation of its student loan practices.

The Senate report shed new light on how lenders sought to curry favor with financial aid offices.

Nelnet, a lender based in Nebraska, created an elaborate point system to reward college officials who advised it. Contributing an idea for a product earned 25 credits. Completing an online survey won another 25. The credits could be redeemed for donations to an "alma mater or college/university of choice." Each was good for $1.

A spreadsheet from Chase's student loan unit showed the scope of marketing activities, listing payments of over $1,000 each to produce 405 foldable wallets for Ursuline College, CD replications for Southeastern Louisiana University, 200 T-shirts for Texas Southern University, to name just a few examples.

Bank of America's activities included $11,414 to sponsor a lunch at the College of William and Mary.

In some cases, colleges themselves demanded contributions from lenders. A Citibank sales report told how Chaminade University in Hawaii had asked the bank to hold receptions for admitted students in exchange for business.

The report provided new details of lenders' dealings with Lawrence W. Burt, the financial aid director at the University of Texas at Austin and Ellen Frishberg, a Johns Hopkins financial aid official. Burt was fired and Frishberg resigned after revelations that each had benefited financially from Student Loan Xpress or its parent company, Education Lending Group.