Minn. online university suspends financial aid official

(AP) - A Minneapolis-based online university on Tuesday placed its director of financial aid on leave after an investigation by the New York attorney general revealed that he accepted consulting fees from a student loan company.

Michael Offerman, president of Capella University, said that financial aid director Timothy Lehmann told school officials on Friday that he was paid $12,400 in consulting fees by Student Loan Xpress.

"We are taking this seriously and we want to provide any information we can to help the official investigation," Offerman said.

Investigators in the office of New York Attorney General Andrew Cuomo revealed Monday that Lehmann and financial aid officers at two other colleges had received consulting fees from Student Loan Xpress.

The information was uncovered as part of a wider inquiry into allegations that student loan lenders have provided kickbacks to officials at various schools for steering students their way.

Offerman said that Capella had a week ago initiated its own internal review of student loan practices after the New York investigation raised the issue's profile.

It was in response to that review that Lehmann revealed he had consulted for Student Loan Xpress in late 2005 and early 2006, Offerman said.

Capella officials were still deciding how to respond to Lehmann's revelation when they learned on Monday that New York investigators were looking into him as well, Offerman said.

Lehmann did not immediately return a phone message left at his home Tuesday by The Associated Press.

Student Loan Xpress is on Capella's list of 15 recommended lenders, but had that spot prior to Lehmann's consulting for them, Offerman said.

The list is simply meant to provide guidance to students but there's no financial benefit to the school or to students when a preferred lender is chosen, he said.

Offerman said there's no evidence yet that Lehmann steered students to Student Loan Xpress. But he said the school would conduct its own investigation into Lehmann's relationship with the company, which will also consider whether he violated Capella's conflict of interest policy by not earlier disclosing the arrangement.

Offerman said there's no indication any other Capella employees had any sort of arrangement with Student Loan Xpress.

CIT Group Inc., the New Jersey-based parent company of Student Loan Xpress, has placed three Student Loan Xpress officials on leave in response to New York's investigation.

Minnesota Attorney General Lori Swanson recently announced the state is conducting its own inquiry into whether Minnesota colleges and universities have received financial benefits from loan companies in exchange for steering students their way.

(Copyright 2007 by The Associated Press. All Rights Reserved.)