USC Financial Aid Director Retires Amid Conflict Allegations

The Associated Press

Published 1:16 pm PDT Friday, June 1, 2007

LOS ANGELES -- The University of Southern California's financial aid director retired Friday, two months after she was placed on paid leave because of her alleged dealings with a lender recommended to students.

Catherine Thomas, who held the USC job since 1990, had become the subject of a New York-based investigation into whether financial aid officers obtained discounted stock and other inducements to steer students to certain lenders.

She has declined comment.

"The university noted that Ms. Thomas' actions in connection with the student loan company Student Loan Xpress were inconsistent with USC's conflict-of-interest policy," the university said in a statement.

"The university's investigation of student lending practices is ongoing and USC is cooperating fully with investigating authorities," according to the statement.

Thomas came under scrutiny because of her dealings with the former parent company of Student Loan Xpress. Thomas had acquired and sold about $14,000 worth of stock in the parent firm Educational Lending Group, New York prosecutors said.

New York Attorney General Andrew Cuomo's investigation led to congressional and U.S. Department of Education inquiries into the $85 billion student loan industry. Investigations are continuing.

USC's internal review determined no students were harmed by Thomas' ties to Student Loan Xpress, which the university removed from its list of preferred lenders.