Emerson VP placed on leave; was accused of impropriety by US senate report

6/16/07Daniel Pinch, Emerson's associate vice president for student administrative services and acting dean of enrollment, was placed on paid administrative leave Thursday following a U.S. senate report that accused him of financial improprieties.

The report, produced by the senate's Health, Education, Labor and Pensions Committee headed by Sen. Edward M. Kennedy, D-Mass, accused officials from several universities (the University of Texas-Austin, Johns Hopkins, Texas Tech, the University of Cincinnati and Rutgers among others) of accepting incentives in order to place banks or student loan companies (Citibank, Citizens Bank, Chase, Student Loan Express,and Northstar among others) on preferred lender lists that may eventually execute as many as 90 per cent of a school's student loans, the report said.

David Rosen, Emerson vice president for public affairs, said in his notice to the faculty that the college is "looking into the issues that pertain to Emerson College and our Dean of Enrollment, Dan Pinch. We take the issues raised by Senator Kennedy quite seriously and will conduct a full and prompt review. Pending the outcome of this review, Dan has been placed on a paid administrative leave."

The report also alleged that Pinch received $36,000 in consulting fees from Collegiate Funding Services Inc. while CFS was on Emerson's preferred lender list from 2001-2003. The senate report said Pinch received $1,500 a month for being a "Government Relations Liaison" and for assisting the CFS in "any matter arising out of the business affairs of the Company."

Between 2001 and 2003, the report said, Pinch was on the CFS's advisory board and lobbied congress and other colleges on behalf of CFS. The report said, "Federal law and regulations prohibit lenders in the FFEL (Federal Family Education Loan) program from offering, or school officials from accepting, membership on a lender advisory board in exchange for preferential treatment of that lender, including placement on the school's preferred lender list."

The report also said financial institutions paid a lot of money to fly advisory board members for meetings at hotels and resorts. The members also were treated to expensive restaurants, trips and spas. Pinch said Citizens Bank is one of the currently preferred lenders at Emerson. According to Rosen, Pinch was a member of CFS's advisory board but had resigned from it.

During an interview on June 14, the morning before he was placed on administrative leave, Pinch said Emerson had received "less than $5,000" from the loan programs that the Education Finance Partners made to the school. He said the money was used to help fund scholarship programs but "we will not be taking the revenue sharing in the future."

Pinch said Emerson currently has two preferred lenders, Citizens Bank and NESLA (New England Student Loan Authority) that it recommends to students. According to the new rules proposed by the Education Department, universities are required to have at least three preferred lenders that they recommend to students. "So we are looking to add a third one," Pinch said during the interview.

He said 70 percent of students at Emerson take loans and most of them agree on lenders the school recommends.

Each year, the director of financial services, the person who runs the loan program at Emerson and Pinch evaluate hundreds of applications from potential lenders and the school's preferred lenders in that year. "If their [lenders] rates are not good, they are out. If their service is no good, they're out," Pinch said.

The three-member team also looks at how the loan is to be processed. "Are we able to process the loans electronically utilizing a system that we use that makes it easier to follow up and make sure that if something delays or students are late, we still process it," Pinch said. "However, we will process any loan from anybody."

He said students are not directly involved in the selection of the school's preferred lender list. "We, however, do take into account any student comments if they told us they had a bad experience, or tell the loan isn't working properly or they can't get it. Then, we would take it into consideration every year when we re-evaluate who we're going to utilize."

According to a phone interview quoted in The Boston Globe today, Pinch said he did not do anything wrong and was confident that "a fair, independent review" would show Collegiate Funding Services Inc., was not on the school's preferred lender list while he was on its advisory board.

The senate report said that although a lender's "charitable activities" to colleges "are laudable," offering inducements" in exchange for attendance at advisory board meetings,however, raises an unacceptable appearance of conflict of interest." When lenders "provide benefits to school officials for service on advisory boards (over and above expense reimbursement), there is a significant risk that students and parents will begin to question whether their school officials are really serving as neutral sources of information and advice for lenders, or
whether they are quasi-employees of that lender and are incentivized, through
compensation, to market that company's products," the report said.