Attorney General Marc Dann is investigating the relationship between the Ohio University Alumni Association and a loan consolidation company as part of a statewide investigation of alumni foundations and preferred lenders.
The investigation is the result of an earlier inquiry into the relationships between colleges and universities and student loan companies. During that investigation, Miami University revealed that its alumni association had a financial arrangement with a lender, according to a press release from the attorney general.
This sparked an investigation of alumni association relationships with preferred lenders.
Like Miami, the Ohio University Alumni Association has a marketing relationship with the National Education Loan Network (Nelnet) a loan consolidation company.
Under the agreement, the Alumni Association provides Nelnet with the exclusive right to intellectual property. This includes the names of alumni and the right to use the association's name and logo, as well as space on the association's Web site for promotional links, according to the contract entered into by Alumni Association Executive Director Ralph Amos in 2003.
Amos was out of town and could not be reached for comment.
In return, Nelnet pays the Alumni Association $25,000 per year along with $100 for each completed loan consolidation application.
The amount totals about $39,000 per year, OU spokeswoman Sally Linder said.
Comparatively, The Columbus Dispatch reported that The Ohio State University makes at least $35,000 per year from its relationship with Student Trust, another student loan company.
The problem is that alumni who see the alumni association-endorsed advertisements for these companies get the impression that this is the best possible method or service
when that isn't necessarily true said Leo Jennings, director of communications for the attorney general.
The relationship between the two entities is not always transparent, which potentially violates the premise of full disclosure and the Consumer Sales Practices Act, he said.
A link on the front page of the Alumni Association's Web site for loan consolidation under the heading alumni services provides information about Nelnet as well as a statement that reads Your Alumni Association receives financial proceeds from the administrators that provide benefit and service programs to our alumni. These proceeds fund alumni programs and activities.
It is unclear whether this disclaimer has always been included at the bottom of the page.
Legal issues could also arise is if an individual at an alumni association was directly benefiting from a relationship with a preferred lender. Linder said that that is not the case at the university and that all of the money goes toward Alumni Association programming and a newsletter published by the association.
There is nothing unusual or unethical about these arrangements she said, which help alumni make the transition from Ohio University.
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Alumni Association profits off agreement
