Site Meter

Fiduciary Duty and Financial Aid

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

You may also like...

6 Responses

  1. Even in the worst case possible the financial aid officers are undisclosed paid endorsers, which is a deceptive practice. If such an officer says, “I recommend this company’s services,” without the disclaimer, “they gave me a ton of stock,” the student is misled into thinking the assessment is based on an honest appraisal of the quality of the company’s services.

  2. Dave, I also teach the H.&R. Block case, which as you know was decidedly differently in different states. I’m not sure I’m convinced that Block was the agent, but I see the argument. Also, mortgage lenders are not agents of the borrowers under almost all state laws, which seems to be relevant here. I don’t see a court saying that the university’s financial aid office is the agent of the student either.

    The fact patterns are almost too close to an attorney receiving expensive entertainment tickets, dinners, and (at our firm) custom-made shirts by court reporter firms vying for business. Of course, attorneys (who are agents) hire these firms for the benefit of our clients, who pay their bills.

  3. dave says:

    If the attorneys were inhouse, I assume that the tickets, dinners, and shirts would all be corporate opportunities subject to disgorgement upon request. Presumably, the only reason that the same is not true for the private attorney is a practical/standing problem: how could you determine which of the many principals the opportunity “belonged” to?

  4. hdhouse says:

    H&R Block is your primary mistake. Student loans are not in the same category as a public, for profit company.

    First, there are several offering institution types. I can think of three main ones:

    1. publically funded institions that operate with major financing from the State…e.g. UofM, Mich. State, etc.

    2. private colleges that enjoy a certain status from the IRS

    3. for profit institutions that, by in large, offer vocational credits or courses (cosmotology, surgical assistant, etc.)

    Block and #3 appear to be something of the same. Groups #1 and #2 are what Spitzer is going after here in New York. #1 group, SUNY schools are his prime target and that kind of sweetheart deal that guides a student through a state sponsored institution populated by state employees who are, in no uncertain terms, taking kickbacks from the private sector for guiding students to lenders is just reprehensible….and that is the problem here.

    Students have an expectation that the state is operating in their interest and their interest alone and that no one is taking an undisclosed profit in the transaction. No one would mind if Chase donated a million bucks to higher education in consideration. Everyone gets crazy when Mr. Smith in financial aide takes $50k in a cash “thank you” for steering kids to Chase.

  5. MICHAEL OGIERIAKHI says:

    Sir, I am very grateful to you for the admission you granted me at Novus Law School, but I am likely to experience some constraints in transferring funds to you. I humbly request that you kindly assist me for financial aid ( including student loan package) application materials to enable me fully become a member of the Novus Law School Family. I am in great love with Novus’Law.

  6. Rarelyignited says:

    I just have to ask after reading this, if anyone can direct me to a lawyer who would handle such a case that involves the breach of a fiduciary relationship assumed between a student and financial aid adviser. There are other misc. offenses such as violation of privacy, and breach of contract on behalf of the institution. If anyone can help me, please respond. Thank you kindly.