Dissenting votes and divided debate are a rarity during University of Nebraska Board of Regents meetings.
But two years ago, the regents approved UNL's partnership with the National Education Loan Network, a Lincoln-based student loan provider also known as Nelnet, by a 6-2 vote and echoed some of the same concerns raised last week by an Education Department audit report.
The report found that Nelnet had overcharged the government on student loans by $278 million.
In February, Congress closed the loophole used by Nelnet, which allowed private lenders to receive above market value interest rates on student loans.
The agreement approved by the regents entitled the University of Nebraska-Lincoln to 6.05 percent of the profits from graduate and professional student loans bought by Nelnet.
Regents' concerns included Nelnet's use of a loophole in federal law to receive higher interest rates by combining new loans with old loans and their ability to make profits at the expense of the government.
Regent Chuck Hassebrook, of Lyons, said he knew Nelnet was already making huge profits two years ago through a loophole but voted in favor of the partnership with UNL to make college loans more accessible for students.
"I held my nose when I did and said we need to change the rules," Hassebrook said.
Regents Randy Ferlic and Howard Hawks, of Omaha, cast the two dissenting votes. Regent Hawks was unavailable for comment.
Hassebrook co-signed a letter with Regent Howard Hawks, of Omaha, and sent it to Nebraska's Congressional Delegation. The letter requested support for legislation changing federal law by calling on universities not to make student loan arrangements with private companies.
He said federal student loan programs provided financial assistance to graduate and professional students at a higher cost to government, which sparked a dilemma for Hassebrook.
"The concern was it put us in a position to choose what's best for lower and moderate income students and what's best for taxpayers," Hassebrook said.
In his letter, Hassebrook favored House Resolution 4370, which was eventually killed because it would provide direct lending to universities and eliminate the need for private lenders and save the government money.
Regent Charles Wilson, of Lincoln, said he supported the agreement with Nelnet after hearing a summary report given by UNL Chancellor Harvey Perlman that outlined the plan's benefits to UNL.
Wilson said he remembered the chancellor's report noted Nelnet's questionable ethical practices, but he said that wasn't enough to vote against the arrangement because the company had broken no laws.
Wilson said he would withhold judgment on Nelnet's pending situation until the issue is resolved by the Department of Education.
"At this point, it is yet to be determined if criminal charges occurred," Wilson said.
Regent Randy Ferlic, of Omaha, said he agreed with the findings made by the Education Departments report.
"It's the one time Sen. Ted Kennedy (D-Mass.) and I agree on something," Ferlic said jokingly.
Ferlic said when he voted against the Nelnet partnership two years ago, he felt the company was abusing the law by grouping new loans with old loans to get a 9.5 percent interest rate from the government.
He said current bankruptcy laws don't permit absolution of student debt, which benefits lenders.
"What Nelnet and Sallie Mae all want is for students to consolidate all loans," Ferlic said. "I think it's a good business strategy."
Regent Jim McClurg, of Lincoln, said while he wasn't familiar with Nelnet's situation, he hasn't heard of anything that would make him drop his support for UNL's partnership with Nelnet.
"Nelnet has been a very good Lincoln company," McClurg said. "It appears to be an excellent partner for UNL."
McClurg said he recalled the federal government's flawed student loan policy, which allowed private lenders to win high interest rates on loans and favored legislation proposed two years ago.
"If government had a flawed policy, it would make sense for us to correct it," McClurg said.
Ferlic said regents and students are both at fault for a lack of financial awareness.
"We don't have sufficient education for students when they enter college," Ferlic said. "We need to educate them on the consequences of six years versus four years of college and changing majors."
Hassebrook said he wanted what's best for students to come at the lowest possible cost for Congress.
He said he wouldn't change the vote he made in 2004.
"If I was faced with the same decision and the same set of facts, I would vote the same way I did," Hassebrook said. "And ask Congress to change the law."
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