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Administrators at Capella University under College Loan Investigation

A few months ago, it came to light that financial aid administrators at many colleges across the U.S. were pushing students to take out school loans with companies that offered incentives to financial aid personnel. These loan companies would offer loan advisors a commission whenever they encouraged students to get their college loans through their company. Capella University, after beginning their own investigation into such practices, put financial aid director Tim Lehmann on a paid suspension after discovering that he has been paid more than $12,000 through one of the school's loan companies, Student Loan Xpress.

Now, university officials at Capella University have signed an agreement with the states of New York and Minnesota that sets certain provisions on their financial aid practices. According to TwinCities.com, the provisions of this agreement include:

  • Receiving anything of value from lenders in exchange for placing them on a list of recommended lenders given to students is prohibited. Employees of the college also are not allowed to receive gifts or other perks of value from lenders.
  • The school must disclose the criteria it uses to select preferred lenders. Students also must be told they can select any lender, regardless of whether it is on the college's list.
  • No lender that has an agreement to sell its loans to another lender can get on the preferred list unless it discloses that fact.
  • The school must ensure that employees of lenders never identify themselves to students as university employees.

Capella University insists that many of the provisions of the agreement were already practices that the school abided by. In addition to Capella, 23 other colleges across the U.S. have signed similar agreements.


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