2 banks criticized for nursing-school loans

Deseret News (Salt Lake City), Feb 12, 2005 by Stephen Speckman Deseret Morning News

Bank One is joining KeyBank as yet another lender linked to the financial woes of the now defunct Academy of Nursing.

Jason Gorder currently owes Bank One about $21,000, most of which was disbursed by the bank to him and then turned over to the academy. His wife, Laci Gorder, said she knows of "numerous" students who also used Bank One.

"At the time, that is how we thought it was supposed to go," Laci Gorder told the Deseret Morning News in an e-mail. The academy, she said, "led us to believe this was normal practice."

"We had no idea that it was illegal to collect that much tuition up front because, if it was," Gorder added, "we thought Bank One would not allow the whole amount to be disbursed to us."

Gorder said over the phone that the academy told her husband to use Bank One and that someone at the academy filled out most of the loan papers. Because of that and the fact the money was disbursed to the borrower and not the academy, Gorder said she has little hope Bank One will discuss a refund.

Bank One spokeswoman Mary Jane Rogers said Friday her bank is just getting "up to speed" on the academy's problems.

"We will have more information for our student borrowers and other interested parties next week," Rogers said from her office in Phoenix. "We are working with the (U.S.) Department of Education and other regulatory agencies to make sure the student borrowers are treated fairly. We also want to make sure that they receive all protections of the Higher Education Act."

Laurel Roper said she is out about $20,000 and that Mark Hansen, who with brother Aaron Hanson founded the academy and may still own the business, told her to pay the academy the full amount of her loan.

Neither brother appealed by the Friday deadline on two citations that accused the academy of breaking state law by collecting too much tuition in advance of services rendered.

The Hansens' attorney, Brian Barnhill, said that at one time it would have been legal to ask for tuition monies in large, up-front sums. The state, he added, eventually changed the law to allow six months of tuition and then three months as the maximum amount that a business like the academy could collect in advance.

Gorder said that about one month ago a Bank One official told her that if they had known the money would be used for the academy, they wouldn't have funded the loan because the business was not on their approved school list and because it was not accredited.

Jeff Bell told the Deseret Morning News that his wife is out $17,000 from a Bank One deferred loan.

Gorder also mentioned a "high-risk" finance company out of California called TFC, which she said financed loans for those who did not have good enough credit to use KeyBank or Bank One.

Utah Division of Consumer Protection director Francine Giani said she is aware that KeyBank and TFC aren't the only lenders involved.

"This is all part of our investigation," Giani said. "We have lots of victims out there." She estimates that academy students are out upwards of $2.5 million.

KeyBank officials this week said they issued 292 loans worth more than $5 million for students attending the academy in Salt Lake City. Students also learned they may be in line for full or partial refunds from KeyBank.

That's different from what Connie Carlson was told last spring, after being shuffled from one person to the next. She said Friday there was no assistance from KeyBank and that the bank tried to place blame on her for not checking out the academy before taking out a loan.

Carlson said she did ask a lot of questions about the academy, but "no red flags popped out."

E-mail: sspeckman@desnews.com