The executive director of Columbia's undergraduate financial aid office was suspended after the school - and NY State attorney general's office - found "questionable financial ties" to student loan company Student Loan Xpress. David Charlow sits on an advisory board for the company (as do two officials from UT Austin and USC who are also under investigation), and received stock options as compensation.
The Higher Education Watch blog says that Charlow owned at least 7,500 shares and it's not clear whether he bought or was given the shares. But what is clear is that Student Loan XPress did $14 million in business from Columbia as its "preferred lender" (Citibank is the second biggest lender, at $5 million) and that Charlow made $100,000 on the sale of the stock, plus 2,500 stock warrants.
Charlow's involvement with Student Loan Xpress was discovered as part of State Attorney General Andrew Cuomo's investigation into the college loan industry. Cuomo's office sent Columbia a subpoena for records, which set into motion Columbia placing Charlow on leave. During his original statement about the college loan industry, Cuomo said, "There is an unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest. The financial arrangements between lenders and these schools are filled with the potential for conflicts of interest. In some cases they may break the law.”
Check out the list of other kickbacks the loan companies give to colleges - Lenders pay financial kickbacks to schools based on a percentage of the loans that are directed to the lenders. and Lenders pay for all-expense-paid trips for financial aid officers (and their spouses) to high-end resorts like Pebble Beach, as well as other exotic locations in the Caribbean and elsewhere.