3 Connecticut Schools Settle Loan Accusations With Donations

HARTFORD, Conn. — Three Connecticut schools have agreed to donate tens of thousands of dollars to scholarship funds to settle allegations that they received benefits in exchange for giving preferred lender status to a student loan company.

In an agreement announced yesterday by state Attorney General Richard Blumenthal, Fairfield University, Sacred Heart University, and Trinity College denied allegations that they violated laws governing financial aid.

Mr. Blumenthal also announced that the Connecticut Conference of Independent Colleges, a group of 17 schools in Connecticut, agreed to a Financial Aid Code of Conduct.

The code prohibits schools and financial aid staff from accepting compensation from lending institutions.

Connecticut is the latest state to take such action after investigations of the student loan industry found arrangements benefiting schools and lenders at the expense of students.

"This code of conduct assures that students have access to the best available deal, unclouded and uncompromised by other interests," Mr. Blumenthal said.

Attorney General Andrew Cuomo, who has been investigating the student loan industry, said yesterday that 12 student loan companies, including the eight largest lenders in America, have agreed to a code of conduct.

Admissions and financial-aid software discounts of $16,000 to Fairfield, $15,000 to Sacred Heart, and $12,000 to Trinity were provided in 2003 and 2005 in exchange for the schools listing the College Board Inc. education loan program as a preferred lender, Mr. Blumenthal said.

Each of the schools included the College Board on its list of preferred lenders without disclosing to students or their parents that it received the discounts, the attorney general said.