Confusion Surrounds Parental Loan Offer

A recent letter of clarification sent out by the YU Office of Student Finances has brought to light a questionable relationship of benefit to both Yeshiva University and American Express. The Commentator has learned that the Office of Student Finances has released without express consent information relating to the financial status of YU undergraduate students to American Express Educational Financing, a subsidiary of the American Express Company.

The primary responsibility of the Office of Student Finances is to handle tuition arrangements between students and the University. This allows the office access to detailed financial information concerning students and those responsible for paying their tuitions. The American Express Company is a diversified worldwide travel, financial, and network services provider. It is generally considered to be one of the leaders among U.S. companies that issue charge and credit cards. The apparent purpose of the information sharing was to facilitate the American Express effort to market loans and to aid in YU's effort to procure tuition payments.

The facts concerning this partnership were only uncovered as a result of a strongly worded mailing addressed to students and parents that outlined the consequences of delinquency in tuition payments for the fall and spring semesters. This correspondence was mailed and received prior to the due date of the spring semester tuition and thus prompted an unfavorable response from parents.

The letter, dated December 5, was received by a large number of students and or those responsible for tuition payments. The letter printed on Yeshiva University Office of Student Finances letterhead and signed by that office addresses the student saying that "according to our records," presumably referring to those of the Office of Student Finances, "you have an outstanding balance for the '97-'98 academic year." The text continues to say that "a major concern of ours is that you will not be able to register for the next semester." This thinly veiled threat is followed by an urgent suggestion, "we want to help you meet your financial obligations, but to do so we need to work together quickly." The rest of the letter goes on to offer information detailing what it calls "one alternative available to families looking for financing options to pay educational costs." The alternative that is described is the American Express Educational Loans program, and specifically the Parent Loan for Undergraduate Students (PLUS).

The distribution of this letter resulted in numerous phone calls to the Office of Student Finances from distraught parents who wished to voice their displeasure with the tone and implications of the letter . YU Bursar, Jean Belmont, whose office is located in the Student Finances suite on the ground level of Furst Hall, reported that more than ten calls of this nature were received. Some of the parents called since they objected to what they believed was a threat to their dependent's academic career. Others simply could not understand why they were considered to have an "outstanding balance" which might prevent student registration even though that "outstanding balance" referred to the payments for the Spring semester which were not due until December 15. In order to appease the irate callers and to allay the fears of others who remained silent, another letter was sent to all who received the December 5 correspondence.

This text of the second letter, which was signed by Bernard Pittinsky, Director of Finance, and dated December 16, contains an admission that the December 5 communication "could obviously have been clearer." In this clarification, Pittinsky claims that the purpose of the initial mailing was "simply to make students and parents aware of the Parent (PLUS) Loan Program as an option available to meet payments due for the Spring semester." Emphasis was placed upon the contention that the intention of the December 5 letter was not to imply that parents were "delinquent in their payments and that the Spring semester registration would, as a result, be delayed."

On December 31, The Commentator attempted to procure copies of both letters from the Office of Student Finances. Although assistants in the office were able to print out a copy of the December 16 clarification and apology letter, they could not provide the original December 5 mailing. When asked why they no longer had access to that text, one assistant responded, "that letter didn't come from us, it was from American Express."

At the request of The Commentator, Belmont then agreed to and immediately called her contact at American Express in order to have a duplicate of the December 5 letter faxed to the Office of Student Finances. Two hours later, Belmont told The Commentator that she had been advised not to comment on the situation concerning either of the two letters and that she was not permitted to release the fax of the December 5 letter which was then in her possession. Belmont has since revealed that source of advisement to be her superior, Pittinsky. Pittinsky has refused to comment on the matter. On Monday January 5, Belmont released the letter in question to the Office of the Dean of Students which subsequently passed it on to The Commentator.

Further investigation into the matter was hindered by a lack of cooperation at YU and bureaucratic safeguards at American Express. None of the YU representatives either involved with or apprised of the sharing of student financial information with the credit and loans company would discuss the issue until January 20. Similarly, all initial attempts to obtain comments from various offices at American Express were unsuccessful. One employee there, who wished to remain anonymous, explained that The Commentator's questions were encroaching upon "company privacy."

However, the relationship between American Express and YU was eventually elucidated by employees at the American Express Educational Loan Office located in San Diego. Steve McCurry, a sales representative at that office, explained that the PLUS loan offered in the December 5 letter is federally guaranteed to maintain low interest rates. He said that these loans are directed toward "parents who are unable to make their [tuition] payments or who have credit problems."

In explanation of this loan marketing program at universities, Mccurry stated that an American Express field representative first contacts the school and proposes to offer this loan program to students. The university then submits a list of names and other information relevant to students to whom they wish American Express to provide their offer of assistance. American Express then begins the effort to inform the students in need about the PLUS loan in a letter such as the one dated December 5.

McCurry was then questioned about the ethical implications of solicitation and disclosure of student information and the effort to make the letter appear to be an official University mailing despite its American Express origins. He seemed to acknowledge the validity of such concerns. He contended, however, that American Express is just "trying to help people out...by providing funding for students who need it."

McCurry subsequently referred The Commentator to Fabrizio Balestri, Senior Vice President of Marketing at American Express Educational Financing. Balestri added that the program in question is in its second year. He claimed that 20-25 schools participated in the program during the fall semester, but would not name any of those other than YU.

Balestri claimed that the credit company's involvement with the letters was simply for the purpose of expediting the mailing. He, however, admitted that the role played by American Express in the December 5 communication did require them to obtain information relevant to the students who would receive the letter.

Balestri claimed that the information made available to American Express included a list of names and addresses of students who had some minimum outstanding balance. He alleged that details referring to specific students were not revealed. He could not confirm the specific amount of the minimum balance that triggered the mailings. He explained that this amount was determined by the school in conjunction with the American Express field representative. However, he speculated that the minimum amount would have been one which was appropriate for the urgency of the letter which offered the loan. The field representative that dealt with YU has been identified as Suzzane Keighley. Despite numerous attempts, comment could not be elicited from Ms. Keighley.

When questioned about the usage of student financial backgrounds, Balestri emphasized that such information is utilized exclusively for the specific mailing for which it was obtained. Concerning current access to that information, Balestri claimed that the "data has been purged." However, he admitted that the only assurance that YU received relevant to the protection of students from alternative usage of the information provided to American Express was that "we gave our word."

Belmont, who later responded to questioning, called the agreement limiting the improper usage of the information given to American Express a "verbal contract." She added that this kind of procedure is standard in financial offices of all universities who deal frequently with banks and loan companies. Moreover, she claimed that in this specific incident of disclosure "practically the whole [student body] was on the list."

Belmont alleged, in contradiction to Balestri's stated intentions of the PLUS loan program, that anyone with any outstanding balance for the fall or spring semester regardless of amount was included on the list. Furthermore, she did not believe that this represented any infringement upon the rights of students or parents to keep this information private since it was limited in detail to a report of names and addresses. She claimed that this type of information disclosure is commonly practiced by university financial offices in cooperation with various banks and companies. She asserted that "if one parent contacts us and complains that they've been contacted about a [credit] card, we'd stop this [arrangement with American Express]."

However, this assurance is limited in effectiveness due to the fact that parents were never informed of the University's cooperation with the company. Moreover, the December 5 letter that was mailed by American Express was printed upon standard YU letterhead and contained no evidence that would have revealed its actual origin. In addition, it would be difficult for individuals to discover the source of damage to their credit ratings as a result of this collaboration. Therefore, parents could not be expected to complain to YU about American Express since they would never have been alerted to the existence of the connection between the two institutions.

In response to The Commentator inquiry, Balestri declared that the current program that is used to market the PLUS loans to students via the aid of the University would be reevaluated. He expressed concern that American Express would be unable to "offer it anymore, but since it has worked so well, I hope that's not the case." However, this did not seem to phase anyone at YU's Office of Student Finances. Its policy remains as it was and this sort of practice is expected to be continued as long as it is considered productive.