N.Y. College Official Got Job at Sallie Mae

The former director of financial aid at New York's Pace University persuaded the school to award major contracts to student loan giant Sallie Mae while she successfully lobbied the company to hire her, the New York attorney general's office said yesterday.

The official, Desiree Cilmi, was negotiating for a job with the Reston lender in 2004 as she urged the university to sell graduate student loans to Sallie Mae and hire the company to operate a call center, aides to Attorney General Andrew M. Cuomo said. The lender got both contracts and Cilmi left soon after to work at Sallie Mae.

The disclosure is the latest revelation from a widening investigation into the $85-billion-a-year student loan industry. Congressional Democrats and state law enforcement officials have discovered conflicts of interest among lenders, universities and government officials.

Cuomo also announced yesterday that he plans to sue Drexel University in Philadelphia for steering students toward a student loan company in exchange for a $250,000 payoff. The lawsuit would be his first against a school.

Cuomo's office said three other schools -- Pace, the New York Institute of Technology and Salve Regina University in Rhode Island -- agreed in settlements to change businesses practices that Cuomo believes are harmful to students.

"This investigation is a two-front battle: lenders and schools. We have proceeded against lenders and now we are proceeding against schools," Cuomo said in a written statement. "This office has been clear to schools: Settle or we will commence litigation."

Cuomo has been particularly critical of schools such as Drexel University that receive a share of the loan volume they direct toward a company, a practice known as revenue sharing. His aides said the school made Education Finance Partners its "sole preferred private loan provider" in exchange for receiving some of the profits. They said the school has received $124,000 and is supposed to get $126,000 more.

At Pace University, officials said they were unaware that Cilmi was negotiating for a job with Sallie Mae. "If we had known that, she would have been fired," said Chris Cory, a Pace spokesman. Cilmi and a Sallie Mae spokesman could not be reached for comment last night.

The investigation also revealed that Pace entered into a contract with Sallie Mae from 2004 to 2007 for the lender to operate a call center where company employees answered: "Pace University Financial Aid Office."

Also yesterday, Edward M. Kennedy (D-Mass.), chairman of the Senate education committee, called on the Education Department to investigate whether two companies, Federal Family Education Loan Processing and FSLS, were improperly marketing to students by claiming to be part of the federal government and offering free credit cards.

The department said it would investigate. Recorded messages at both company numbers said their offices were closed yesterday.