Ex-official of JHU defends lender ties

Frishberg says a boss suggested work in consulting

June 01, 2007|By Gadi Dechter | Gadi Dechter,SUN REPORTER

On April 5, Ellen Frishberg's boss at the Johns Hopkins University e-mailed her a newspaper article about officials at other universities coming under fire for receiving stock incentives from an upstart San Diego loan company called Student Loan Xpress.

"Yikes! This sounds pretty serious for these aid directors and their institutions," Hopkins enrollment dean William Conley wrote to Frishberg, his director of student financial services who had recommend the lender to Hopkins parents and students.

In her e-mail reply to Conley, Frishberg reassured her supervisor that she hewed to a higher ethical standard. "It's very sad," she wrote. "These are good people who dedicate their lives to helping others. But they broke an ethics rule by taking stock. It was offered to me, but I declined."

Four days later, Hopkins suspended Frishberg after learning from Student Loan Xpress' parent company that she had received not stock but about $65,000 in cash and tuition payments from the lender, in exchange for consulting work. She resigned May 18.

The e-mail exchange is included in hundreds of pages of documents, contracts, invoices, letters and e-mails released this week by investigators for the Senate Health, Education, Labor, and Pensions Committee, which has been looking into relationships between colleges and the $85 billion student loan industry.

In her first public comments since her suspension, Frishberg said that her consulting work was well-known at Hopkins and that she began moonlighting 10 years ago at the suggestion of her former supervisor, after she was denied a raise.

"My supervisor, Dr. Robert Massa, told me that he could not give me a raise, and he suggested that I supplement my income by doing consulting work, as he was doing," Frishberg said in an e-mail originally sent to a Washington Post reporter but provided by her yesterday to The Sun. The documents obtained by the Senate committee were first mentioned in a Post article yesterday.

Hopkins officials said that Massa, now vice president for enrollment at Dickinson College in Pennsylvania, suggested that Frishberg consult with other colleges, not with lenders.

"He does not recall Dr. Frishberg thereafter ever submitting any consulting arrangement to him for approval," said Hopkins spokesman Dennis O'Shea. Massa did not immediately return calls for comment yesterday.

Didn't see a conflict

An 18-year veteran of the university who was venerated by financial aid watchdogs for her commitment to students, Frishberg said that she has been unfairly "vilified" in the media and that she never perceived a conflict of interest in her consulting jobs.

She said she added two of her consulting clients - American Express and Student Loan Xpress - to the school's preferred-lender lists because they offered the best loan discounts to students. Failing to recommend those companies would have violated her obligation to students and their families, Frishberg said.

"I guess I could have not offered their loan to the parents, thereby withholding the best deal I could find for the families of JHU," she said in the e-mail.

Hopkins officials have said they don't believe any borrowers were harmed by Frishberg's actions.

In total, Frishberg received about $150,000 in fees from the government and the student loan industry between March 1996 and February of this year, according to her own summary of consulting work that was released by the Senate committee.

In addition to more than $60,000 from Student Loan Xpress and $3,250 from American Express, Frishberg said she received $48,000 from Collegiate Funding Services, which was acquired last year by J.P. Morgan Chase Co, and about $22,000 from the U.S. Department of Education.

The committee chairman, Sen. Edward M. Kennedy, a Massachusetts Democrat, is leading the effort for legislative reform of the student loan industry. On May 9, the House of Representatives overwhelmingly passed Kennedy's Student Loan Sunshine Act, which would require colleges to adopt a code of conduct that would bar payments and gifts from loan companies to college officials.

In addition to Congress, nearly a dozen state attorneys general and the federal Education Department are looking into whether undisclosed financial arrangements between schools and lenders undermine the best interests of students and their families. A key focus is the "preferred lender" lists commonly compiled by universities.

Most of the lenders for whom Frishberg consulted were not on preferred-lender lists issued by her office. Also, the bulk of Frishberg's work on behalf of private lenders was to "write and correct technical financial aid regulatory details for their websites and printed materials, to improve the information to all students," she said.

But the documents also show that Frishberg used her university position to act as an advocate for her clients. In February, for example, she "highly" recommended Student Loan Xpress in a letter to the New School in New York University.

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