LINCOLN Neb.
Student lender Nelnet used a points system to reward members of an advisory board with donations to universities in exchange for attending meetings and providing ideas, according to a U.S. Senate report.
The Nelnet Innovation Council was discontinued in April, less than a year after its formation, according to the company, amid an investigation by the New York attorney general of the $85 billion-a-year student loan industry.
The report, released Thursday by Sen. Edward Kennedy, D-Mass., found many instances in which banks gave student aid officials trips, tickets to sporting events and other gifts.
Other student lenders, including Citizens Bank, Chase, Citibank and Northstar, hosted expensive outings for advisory councils, including a Citizens board meeting at Disney World in February 2006 estimated to cost more than $41,000.
“Providing donations in exchange for attendance at advisory board meetings … raises an unacceptable appearance of conflict of interest …” the report said of the Nelnet council.
But Nelnet spokesman Ben Kiser said Friday that the council was a small strategic research and development group designed to bring new ideas and help the Lincoln-based company improve its products.
“It provided a lot of valuable feedback,” Kiser said. “Their actions were completely ethical and legal.”
