The Johns Hopkins University announced last week an
agreement with the New York
attorney general formalizing adoption of a new code of conduct on
student loans and resolving
New York's investigation of the university.
As part of the agreement, Johns Hopkins specifically denied
that the university has
violated New York law. It agreed to take steps to ensure
compliance of all Johns Hopkins
financial aid staff with the requirements of the code. It also
agreed to provide a report on its
student lending practices to the attorneys general of New York
and Maryland each year for
five years.
The university agreed to make a $562,500 contribution to New
York Attorney General
Andrew M. Cuomo's national fund for educating students and
families about the financial aid
process. Johns Hopkins, under a program to be approved by
Maryland Attorney General
Douglas F. Gansler, will spend the same amount to educate, assist
and benefit Maryland high
school students and their parents.
"Although it is clear that one university employee violated
university policy in her
relationships with student loan companies, Johns Hopkins as an
institution has always stood for
a financial aid program that meets the highest ethical
standards," President William R. Brody
said.
Brody said that reaching an agreement with Cuomo allows the
university to avoid lengthy, expensive litigation. He said that
Johns Hopkins appreciates Gansler's willingness to review and
approve the program to benefit Maryland students.
"The university has reached this agreement," Brody said, "so
that we can focus on what
is truly important: ensuring that our
financial aid program operates in the best interest of
students. Our commitment today to our students and their families
is to redouble our efforts
to ensure that it does just that."
The agreement includes provisions requiring financial aid
officers to attend annual
training, certify annually that they are adhering to the code of
conduct, and disclose any
offers of anything of value they receive from a student loan
company. It also sets general
standards for the creation and composition of any lists of
recommended private lenders that
the university may issue.
The agreement resolves an investigation of Johns Hopkins
that began April 9, when the
university learned that Student Loan Xpress had paid about
$65,000 in tuition for or
consulting fees to Ellen Frishberg, the director of one of Johns
Hopkins' seven financial aid
offices. The payments, made from 2002 to 2006, had never been
disclosed to Johns Hopkins,
a violation of the university's conflict-of-interest policies.
SLX was on lists of recommended
lenders issued by Frishberg's office during those years.
Early in the investigation, Johns Hopkins canceled all lists
of suggested lenders issued
by any of its seven financial aid offices. The university said it
would not consider issuing any
new recommendations until a national consensus is forged on
ethical standards. The university
announced on April 25 that it was voluntarily adopting the code
of conduct proposed by Cuomo,
an adoption formalized by the June 14 agreement.
During the investigation, Johns Hopkins learned and
disclosed to Cuomo's office that
Frishberg had also maintained a consulting relationship prior to
2002 with another lender,
American Express. Frishberg received payments from American
Express during times when
her office recommended American Express as a lender. Frishberg
had not disclosed this
relationship at the time in a manner consistent with the
university's conflict-of-interest policy.
Frishberg was placed on administrative leave April 9 and
resigned May 18. The university
said it found no evidence that any student or parent borrower was
harmed financially because
of any arrangement between Frishberg and a lender. The university
also said it has had no
revenue-sharing arrangements with lenders.
The text of the agreement between the university and the New
York attorney general is
available at
www.jhu.edu/news_info/news/univ07/jun07/text.pdf.
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