[Updated August 1, 2007 with a USA Today story on the expansion of NY AG Cuomo's efforts:]
...Cuomo announced Wednesday his office had served subpoenas and document
requests to 40 athletic departments, 38 of them in the NCAA's top-tier
Division I....Cuomo is seeking information
on deals made by the athletic departments with a student loan provider.
Cuomo said Student Financial Services Inc. (SFS), doing business under
the name University Financial Services (UFS), was also subpoenaed.
The heat stays on colleges and universities, but for now is focused away from alumni associations and toward athletics. But we know that alumni relations and athletics are close partners, especially in the upper echelons of NCAA Division I. This continued scrutiny will almost certainly return to alumni associations.
Special thanks to East Carolina's Paul Clifford for the heads up on this latest chapter.
[Updated July 31, 2007 with this Chronicle News Blog story:]
Under the terms of a settlement agreement ... Nelnet will
cancel its “affinity” agreements with 120 alumni associations and pay
$2-million into a consumer-education fund....
[Updated July 26, 2007 with this information:]
According to an item in Inside Higher Ed, Nelnet is
ending its relationships with more than 100 alumni associations in
which the lender...has paid them fees [and sometimes] a share of
revenue in exchange for the right to market consolidated education loans to graduates of their institutions.
A Nelnet spokesman said:
Nelnet has done our best to remain firm in our support of the
appropriate and valuable affinity consolidation services that we
provide to alumni association clients and their members, [relationships ] similar to those that many companies and industries
have with alumni associations to offer members a variety of products
and services.
[Original Posting:]
CASE is providing a set of Frequently Asked Questions to help alumni professionals talk about loan consolidation affinity agreements, which have been scrutinized and publicized by New York State Attorney General Andrew Cuomo (as reported here on May 4, 2007).
In an email to alumni executives on July 20, 2007, CASE President John Lippincott wrote that
the U.S. Senate may consider legislation addressing student loans. A current draft of the legislation...would prohibit alumni associations from accepting payments from or co-branding with private lenders in the marketing of student loans. One result could be the effective elimination of affinity agreements between loan consolidators and alumni associations.
Pointing out that "there is nothing inherently wrong" with alumni loan consolidation services, Lippincott acknowledges nonetheless that many associations are distancing themselves from these agreements. He adds that
we must clearly define the differences between the student loan and alumni loan consolidation issues and...we must proactively communicate the value that affinity programs of all types offer to alumni, their associations, and their institutions.
In closing, Lippincott adds that "CASE is partnering with the Council of Alumni Association Executives to survey alumni associations about the nature and impact of their affinity programs."
So keep an eye out for the survey, check the FAQ and make up your own mind - in collaboration with your colleagues and Boards - about the pros and cons of these and other affinity partnerships.