Mass. schools linked to lender in probe

Boston College and the MGH Institute of Health Professions yesterday became the latest Massachusetts schools linked to a lending firm that gives universities perks in exchange for listing the company as a preferred lender.

Attorney General Andrew Cuomo of New York named BC and the MGH Institute of Health Professions, a graduate school in allied health specialties that is affiliated with Massachusetts General Hospital , as being among 28 schools whose financial aid officers sat on advisory boards for College Loan Corp., the nation's seventh-largest student loan provider.

Cuomo, as well as Massachusetts Attorney General Martha Coakley, Senator Edward M. Kennedy, and others have been investigating lenders for months for ethical misconduct, including paying colleges to recommend their companies.

The San Diego-based College Loan Corp.'s advisory boards had provided financial aid officers such perks as all-expense paid trips to conferences, including meals and entertainment, according to Cuomo's investigation.

"Students were steered towards this lender and never told that the financial aid officers sit on their boards," Jeffrey Lerner, a spokesman for Cuomo, said yesterday.

The company has agreed to a code of conduct and promised not to reimburse advisory board members for expenses associated with meetings.

"Integrity and ethical business practices are the cornerstones of College Loan Corporation's success," Tracy Neumann, the company's senior vice president, said in a statement.

Melissa Metcalf, manager of financial aid at BC, said yesterday that her name was automatically added to the board three years ago when a previous financial aid officer who was on the board left BC. But Metcalf said that the company never officially asked her to participate and that she never attended any meetings or conferences and never received any compensation.

"As per our policy, no BC employee has received any benefits from CLC or any other student loan company," said Jack Dunn, a BC spokesman.

BC no longer lists College Loan as a preferred lender for undergraduates, but it is still on the list for graduate students, Metcalf said.

Elayne Peloquin, director of financial aid at the MGH Institute, said yesterday that she had resigned from the College Loan Corp's board this week "due to the current media and negative public scrutiny associated with them."

Peloquin said she had served on the board for two years and attended two annual meetings at the company's headquarters in San Diego.

"They paid for my travel, but it wasn't a fun trip," Peloquin said. "I asked them to stop the car so I could get a picture of the beach on my cellphone, but that's about all I got."

Peloquin said her school removed the company from its preferred lenders list in 2006 because of poor loan servicing and student complaints. She remained on the board for another year because many students continued to use College Loan as their lender.

Cuomo's investigation also found that the company hosted financial counseling sessions on behalf of schools and misused them as a marketing opportunity. Federal law requires that the sessions provide lender-neutral information.

The student loan company has reached a settlement with New York State and agreed to pay $500,000 to a national education fund to educate high school students and their families about financial aid, Cuomo's office said.

In March, Cuomo said six other Massachusetts schools had revenue-sharing agreements with lender Education Finance Partners. Boston University, Bridgewater State College, Emerson College, and Berklee College of Music accepted sums ranging from $1,500 to $23,000. Mount Holyoke said it never received payments because loan amounts were too small. Becker College would not say how much it accepted.

BU returned the money to the company, according to a BU spokesman, and Bridgewater officials said they would return money to students and end its relationship with the company.

The US Senate is considering a House-approved measure that would limit conflicts of interest.

Tracy Jan can be reached at tjan@globe.com.