Officials from Cuomo's office physically monitored the group's annual convention last July to ensure that corporate sponsors from banking institutions didn't ply student loan administrators with lobster dinners, iPods, DVD players, nighttime parties, or trips to vacation resorts, all types of incentives offered to attendees in the past.
In other cases, school employees in charge of handling student loans simultaneously held thousands of shares of stock in lending companies, earned tens of thousands of dollars in consulting fees from them, and served on their advisory boards.
The Chronicle of Higher Education has followed the investigations closely and quoted a lobbyist in mid-January describing the NASFAA as "radioactive" on Capitol Hill due to the widening tumult. A congressional inquiry led by Sen. Ted Kennedy (D-Mass.) revealed last September that a University of Southern California official accepted Rose Bowl tickets from Citibank, a major national player in student lending.
Aid officials at the University of Texas "were treated to ice cream, lasagna, barbecue, candy bars, popcorn, happy hours, birthday cakes, cookies, and other personal benefits," according to the report.
A spokesperson for the NASFAA refused to comment beyond a statement released following Day's appointment. But Day told the group's members in a recent e-mail that national headlines regarding the kickbacks "have diminished the significance of our contributions," and he hopes to ease the criticism by holding "listening sessions" around the country.
"We need to develop a public relations/marketing and communications offensive that paints a more complete and compelling picture of the difference we can make in students' lives," Day wrote.
The scandal erupted around what are known as preferred lenders lists, which colleges and universities distribute to students struggling to navigate the complex world of school loans, where private banks compete aggressively with direct lending offered by the federal government.
Most students rely on their school's list of preferred lenders to make a decision, so banking institutions do whatever it takes to get their name on those lists (or their logos on school paraphernalia), from showering student-loan bureaucrats with lucrative gifts to exclusively sponsoring athletic departments and alumni associations.
Schools and lenders have promised to abide by a new list of ethics rules, drafted by Cuomo's office in addition to other settlement terms, to regulate their conduct, and to restore faith in financial aid administrators.
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