USC placed its financial aid director on paid leave Thursday as New York authorities continued to examine her business ties to a lender she recommended to students, part of a widening investigation sending ripples of shock through higher education circles.</p>
<p>In a brief statement, USC said it had launched its own inquiry of Catherine Thomas’ relationship with Student Loan Xpress Inc., which had been placed on the university’s list of preferred lenders.</p>
<p>At Pomona College in Claremont, Dean of Admissions Bruce J. Poch said he was stunned by news of the investigation. Thomas has “always been viewed as a competent and very knowledgeable person,” he said. Poch said Pomona has a strict code of ethics prohibiting the sort of business relationship under scrutiny in the case of Thomas, the Columbia official and a third administrator at the University of Texas. “I can’t imagine what was going through people’s heads that made them think this was legitimate,” Poch said of the stock acquisitions.</p>
<p>New York state Atty. Gen. Andrew M. Cuomo’s office said in a letter to USC on Wednesday that investigators were looking into whether Thomas, an associate dean, “engaged in deceptive practices or other illegal conduct” when she acquired 1,500 shares of stock in Student Loan Xpress’ then-parent company, Education Lending Group.</p>
<p>The developments at USC are just one element of a far-flung investigation into possible improprieties in the $85-billion-a-year student loan industry.</p>
<p>Higher Ed Watch, part of the New America Foundation, disclosed Thursday that a U.S. Department of Education official owned about $100,000 worth of stock in Education Lending Group. The official, Matteo Fontana, oversees all lenders and guarantee agencies that participate in the Federal Family Education Loan Program.</p>
<p>Also Thursday, the Associated Press reported that State University of New York Chancellor John Ryan serves on the board of directors of CIT Group, the current parent company of Student Loan Xpress.</p>
<p>An SEC filing shows that Ryan earned about $146,000 last year in cash, stock and options for his service on the CIT board, a relationship that had been approved in 2003 by a state ethics commission, a SUNY spokesman said.
<a href=“USC puts financial aid chief on paid leave”>USC puts financial aid chief on paid leave