Reference no: EM131014872

New York Attorney General Andrew Cuomo uncovered some interesting practices in the field of student lenders and college loan officers. The investigation, triggered by a whistle- blower's report to Mr. Cuomo and involving 100 colleges and universities and six student lenders, discovered the following types of activities by the campus financial aid  officers:

• David Charlow, dean of student affairs at Columbia, owns 7,500 shares and 2,500 warrants in Educational Lending Group, Inc., the parent company of Student Loan Express. The company did disclose the ownership interest in its SEC filings.*
• Lawrence Burt, VP of student affairs and director of the office of student financial services at UT Austin, owns 1,500 shares and 500 warrants in Educational Lending Group. Mr. Burt said that "his ownership of stock in the company did not influence his decision about whether to place it on the list." "I did not do anything wrong," was Mr. Burt's only comment.**
• Catherine Thomas, associate dean and director of financial aid at USC, is also listed as a stock and warrant owner in the company.
• Ellen Frishberg, financial aid director at Johns Hopkins, took a total of $130,000 in consulting fees, only half of which was disclosed to the university.

Use the following model to analyze the student loan situation.

Steps for Analyzing Ethical Dilemmas and Case Studies in Business

1. Make sure you have a grasp of all the available facts.

2. List any information you would like to have but don't and what assumptions you would have to make, if any, in resolving the dilemma.

3. Take each person involved in the dilemma and list the concerns they face or might have. Be sure to consider the impact on those not specifically mentioned in the case. For example, product safety issues don't involve just engineers' careers and company profits; shareholders, customers, customers' families, and even communities sup- ported by the business are affected by a business decision on what to do about a prod- uct and its safety issue.

4. Develop a list of resolutions for the problem. Apply the various models for reaching this resolution. As you apply the various models to the dilemma, you may find addi- tional insights for questions 1, 2, and 3. If the breach has already occurred, consider the possible remedies and develop systemic changes so that such breaches do not occur in the future.

5. Evaluate the resolutions for costs, legalities, and impact. Try to determine how each of the parties will react to and be affected by each of the resolutions you have proposed.

6. Make a recommendation on the actions that should be taken. (Analysis appears at the end of the chapter.)