Sept. 21, 2007

Colleges Plot Strategy on Conflicts of Interest

As the student loan scandal has washed over higher education, college leaders have been criticized at times for responding too narrowly, ignoring the possibility — or, depending on one’s view, the likelihood — that some of the same conflicts of interest inherent in the financial aid world exist in other college and university operations. Recent revelations about possible commercial conflicts in study abroad programs, for instance, have fanned those arguments.

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On Thursday, nearly 50 leaders of higher education associations and campus presidents and other officials gathered in the Washington office of the American Council on Education for a long-planned meeting — off the record, no reporters allowed — at which they talked about whether and how college leaders should respond, broadly, to their perceived conflict of interest problem. Officials of most major college associations — of business officers, technology administrators, lawyers, and facilities managers, among others — were represented.

David Ward, president of ACE, higher education’s umbrella group, said there was broad agreement among those attending that there is a problem and that higher education leaders ought to try to respond to it in a cohesive way, by providing advice and guidance to campuses. “The thing that kept coming through again and again is that many of these things are not a matter of legality, but are more a matter of questionable or bad judgments. There’s a sense that campuses may not have the kind and frequency of guidance they need.”

While some of those in attendance urged caution, to avoid “throwing the baby out with the bathtub,” as Ward put it, he said the group reached consensus that “this isn’t just a financial aid problem,” that the student loan controversy may be “only the tip of the iceberg,” and that “we want to encourage a look at other areas of campus where there may be problems,” since “a lot of the attention so far has been narrowly construed” in response to financial aid offices.

Ward said the group —after a briefing by two lawyers — had focused its discussion on three key problems and possible approaches to solving them.

First, there was general agreement that colleges needed significantly greater “transparency and disclosure” in all their outside business arrangements, Ward said. “If there’s a new Coca-Cola bottling contract, a new place in the stadium for skyboxes ... anything commercial, information about who the money came, how much it costs needs to be out there.” He said that by the time the group next met in late November or early December, he expected it to review “some sort of statement about the need for full disclosure” by campuses.

Second, Ward said the participants agreed that many colleges communicated too little with their employees about their rules, and perhaps more importantly their ethical ground rules, for commercial relationships and conflicts of interest. This is especially true as more and more campuses have delegated negotiations and decisions about “quite large contracts” to middle level managers, who might not have as clear a sense as senior administrators about the institution’s rules and expectations. “We sense some weaknesses in internal communication systems within universities,” Ward said.

Lastly, the group agreed to create a small committee to produce by the November meeting a list of “diagnostic questions” about potential conflicts, framed in such a way that “if the answer to [the questions] was no, that’s an indication that you might have a problem” with a particular situation, Ward said. The goal of that, he said, is not to produce a list of things to do and not to do (which lawyers would probably tell them is a bad idea, because it could be used against them later), but to “illuminate principles” that should guide campus officials as they confront arrangements that might seem to fall into a gray area.

Ward said that the council — at a June meeting at which Education Secretary Margaret Spellings had urged college leaders to confront the conflict of interest issues head-on — had invited the Education Department to send a representative to participate in Thursday’s meeting, but that department officials had declined, saying they might want to be involved later in the process.

— Doug Lederman

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