Major University VP Fired Following Financial Aid Fraud Investigation

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May 14, 2007 3:51 PM

A top financial officer at the University of Texas is the first school official fired in connection with the nationwide student loan scandal that erupted in March.

Investigators found that Dr. Lawrence W. Burt, who headed UT's Office of Student Financial Services since 1994, accepted stock from Student Loan Xpress in exchange for placing the company on the university's preferred student lender list.

Burt was one of nearly a dozen university officials suspended in the student loan scandal that hit universities across the United States but the first known to be fired as a result of the investigation.   

Burt had "sole decision-making authority" as to which lenders were included on the preferred lender list, according to investigators' final report issued today.

"The decision-making process was opaque, and the criteria used did not place primary emphasis on students' interests," investigators said in the report.

Burt has reportedly denied any wrongdoing throughout the investigation.

In a statement released by the university, UT President William Powers Jr. said, "Restoring the credibility of our Office of Student Financial Services is paramount."

Columbia University, the University of Southern California and Johns Hopkins University are among the schools who suspended their financial aid officials for allegedly taking kickbacks from Student Loan Xpress in exchange for putting the company on their preferred lender lists.  Ellen Frishberg, director of student financial services at JHU, resigned.

ABC News reported last week that the parent company of Student Loan Xpress, CIT Group, is paying $3 million to end an investigation into its operation.

By contributing $3 million to an education fund set up by New York Attorney General Andrew Cuomo and adopting a "Lender Code of Conduct," CIT Group agreed to resolve Cuomo's investigation into its questionable lending practices.

"CIT is committed to best-in-class business practices and leadership in improving those practices," CIT said in a statement released on May 10th. It also said it supported efforts by Attorney General Cuomo and others to "improve transparency in the student lending industry." Such efforts, CIT said, "will ensure that parents and students are better informed as they consider their college loan needs."