Are the relationships between college financial aid administrators and their preferred lenders too cozy, and do those relationships undermine students' chances to get the lowest cost loans?  Based on some college officers' responses to MyRichUncle, a relatively new student loan company that has questioned how institutions of higher education choose the lenders they recommend to students, we fear that in many cases, the answer is yes.

Last summer, MyRichUncle began a controversial marketing campaign that asked whether colleges, in forging exclusive deals with lenders, were acting in their students' best interests. A number of college financial aid administrators reacted to MyRichUncle's advertisements by announcing that they would not work with the company -- despite the fact MyRichUncle offers one of the most generous deals available on federal student loans. 

Banning MyRichUncle or any other specific lender because of personal pique is highly unethical. In fact, it's illegal. The Higher Education Act forbids Federal Family Education Loan (FFEL) participating colleges from refusing to allow students to borrow loans from the FFEL lender of their choice.

Despite that prohibition, some financial aid officials -- like Dewey Knight at the University of Mississippi -- have been particularly brazen in response to MyRichUncle's accusations. In a terse e-mail he sent MyRichUncle last May, Knight said that the University of Mississippi would not "receive or certify loan certification requests from your company."  This from a representative of a major, public university.

Other aid administrators have been more nuanced. For example, Jack Millis, the Director of Financial Aid at Claremont Graduate University wrote a letter, reprinted in the California Association of Student Financial Aid Administrators' newsletter, stating that he would "certainly certify a loan requested through MyRichUncle," but would do so only after pressing students to consider the benefits offered by other lenders.

Approximately 1,000 students who have applied for student loans with MyRichUncle have run into difficulties getting their loans certified by their colleges, company officials report. These officals say problems encountered by loan applicants are widespread, noting that 40 percent of colleges identified as "top schools" by U.S. News and World Report "had participated in some manner in the delaying of certification."

Now some colleges may have made honest errors. The Education Department -- which has begun an inquiry into these allegations --  is taking the company's allegations seriously.  We applaud early evidence of their oversight.

In a perfect world, the leaders of the National Association of Student Financial Aid Administrators (NASFAA) would also take these concerns seriously. Instead, NASFAA retaliated against MyRichUncle for questioning college-lender relationships by barring the company from attending or advertising at its national meeting. According to the group's president, the banishment is to remain in place until "the Association [i.e. NASFAA] has seen sufficient evidence of a public retraction" of the company's earlier statements. Many of NASFAA's regional and state chapters have followed suit.

Some aid administrators have resisted the pressure from their peers, recognizing that it doesn't serve the profession well to retaliate against critics. The New Mexico Association of Student Financial Aid Administrators, for example, refused to bar MyRichUncle officials from its meetings. And the group's president -- Joyce Eldridge, Director of Financial Aid at Eastern New Mexico University -- has questioned the national association's response.

"Did NASFAA take sanctions against MyRichUncle because of their ads?" Ms. Eldridge wrote in an e-mail to the association in October. "I am concerned that NASFAA would take such a stand against a company that was being truthful."

In her e-mail, she suggested that NASFAA should have reserved its scorn for loan companies that have engaged in the type of activies that MyRichUncle has condemned. "Is NASFAA sanctioning EduCap?" Ms. Eldridge asked, referring to the parent of Loan to Learn, the private student loan company that came under fire from the news media and us when it invited financial aid officers an all-expense-paid, four day trip to the Caribbean.

But few aid administrators appear to have echoed Ms. Eldridge's position. Instead, we have learned that they have pressured companies like Simple Tuition, which offers borrowers a web tool to compare different loan providers, to stop doing business with MyRichUncle. Borrowers who now visit the Simple Tuition site -- which touts itself as providing "the most up-to-date, objective loan information available" -- no longer can get any information on MyRichUncle loan products.

The latest flare up occurred last Thursday when some financial aid administrators noticed that the website of the test-prep company Princeton Review appeared to suggest that their institutions had chosen MyRichUncle as their "partner lender." Indeed, the website's relevant language was misleading and Princeton Review quickly addressed the flood of complaints, but some aid administrators remain inordinately dissatisfied. They seem peeved that the test-prep company would enter into any relationship with a company critical of the financial aid profession.

"In my opinion, the Princeton Review just reduced their credibility to zero," said Tracy Reisinger, the interim director of financial aid at the Pacific Northwest College of Art. "Yes, they probably made a lot of money from this lender to do what they did, but at the same time they have estranged most of the schools they claim to assist with this website."

"As another colleague said 'shame on them,' and I hope it does them no good in the long run," she added.

The real shame is that a conflict between some financial aid administrators and a relatively small company trying pursue an alternative business model is getting in the way of delivering the lowest cost federal loans to students. These people may not like each other, but their job isn't to be friends.  At least for financial aid administrators, it's to make college as accessible and affordable to students as possible.  We applaud the vast majority of administrators who have not lost sight of that goal.

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