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Vacancy in Nevis

October 26, 2006

If EduCap, Inc. hoped to bolster its visibility among college officials with its planned Loan to Learn Education Summit in the Caribbean, it succeeded -- but hardly in a way it could have wanted.

The private student loan company's invitations to bring some financial aid officers and other college officials (and a guest for each) to the Four Seasons Resort Nevis in February for a three-day "educational and motivational" conference, all expenses paid, provoked significant criticism and led numerous financial aid officials in recent weeks to try to dissuade any colleagues inclined to attend from doing so.

And the fallout continued after Inside Higher Ed publicized the meeting in an article Tuesday, as Virginia Tech officials said Wednesday that Tony A. Sutphin, the only college financial aid official contacted who said he had accepted the company's invitation, would in fact not attend the meeting after all.

That raised questions about whether any college financial aid officials would attend the conference -- questions that became moot Wednesday when EduCap, which does business as Loan to Learn, announced in e-mail messages and in a letter to would-be attendees that it was canceling the conference.

Loan to Learn, which provides "alternative" or non-federally subsidized student loans, has become a lightning rod in the student loan industry, partly because of its highly visible and often flamboyant chief executive, Catherine B. Reynolds, and partly because it has been so successful in an industry that has come under significant scrutiny as its share of all student loan volume has grown, as a report released this week by the College Board makes clear.

Student groups and others have increasingly accused some providers of student loans and, in some cases, college financial aid officials of putting their own interests ahead of students’, by engaging in ill-defined practices in which colleges promote certain lenders over others in exchange for a cut of the profits or, more commonly, gifts and other services.

In that charged climate, Loan to Learn's invitations to attend a ritzy conference in an exotic offshore locale (where rooms run $655 a night in February) -- and to pay all expenses for aid officials and their guests -- lit a match. Several financial aid directors said they had turned down the invitation and had actively discouraged peers from going, saying that to do so would raise at least the appearance of a conflict of interest.

Sutphin, Virginia Tech's coordinator for scholarship, Federal Work Study, and loan programs, was the lone financial aid administrator Inside Higher Ed reached who said he planned to attend, and he had advised Loan to Learn on which other financial aid directors to invite.

In an interview Monday, he had said that last year's Loan to Learn summit, in Pebble Beach, Calif., was so good that returning to this year's conference in February was a "no-brainer," and he rejected concerns that taking the pricey perk from a company that seeks the business of the university's students by saying: "I know why I'm going, and my school knows why I'm going."

But Inside Higher Ed's article about the conference prompted a review at Virginia Tech. Larry Hincker, associate vice president for university relations there, said in an interview Wednesday that university officials did not believe that "anything illegal" had occurred, nor did they think that Virginia Tech had added Loan to Learn to its list of "preferred lenders" last year as any sort of "quid pro quid" for Sutphin having attended last year's conference. "We never refuse [adding] anybody to that list," he said.

Still, "in retrospect, this employee went on an all-expenses-paid trip, and something doesn't look quite right," Hincker said. He said that Sutphin had not asked the university's financial aid director, Barry Simmons, for permission to attend the upcoming conference, and that Simmons would not have granted permission had Sutphin asked. "We're troubled by this," Hincker said.

A statement entitled "Standards of Ethics and Conflicts" on the Web site of Virginia Tech's purchasing department contains a lengthy section on "the acceptance of gifts, gratuities, favors or rewards from vendors, contractors and persons seeking to do business with the university."

It notes that the question of "what is OK" is "largely an issue of individual judgment," since the State of Virginia has not drawn a clear line about what is considered nominal and prohibited. But it continues: "For example, it is considered permissible to accept 'giveaways' of promotional items such as pens, calendars, ball caps, and similar items that are offered by vendors at trade shows or training meetings. In contrast, it should be an easy decision not to accept an item of substantial value such as a TV set, a $50 gift certificate, or a trip to Bermuda."

It was not clear whether any other financial aid officers had planned to attend the conference, although several leading aid administrators said they did not know of others who planned to go. That prompted significant speculation about whether Loan to Learn would still hold the conference. Loan to Learn officials did not return phone calls or e-mail messages, but in an interview Monday, George Pappas, the senior vice president for strategic partnerships, had said that the attendees would include a “broad cross section of academia,” including “university provosts, presidents, chancellors, trustees, deans, and deans of admissions,” as well as “some financial aid people.”

He declined, however, to provide a list of those invited or attending, saying they had chosen "not to have their participation in this be public."

 

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