Obama denies LFC additional TARP funds ,orders immediate liquidation of assets, students
By: Bo Woodbridge
Issue date: 4/2/09 Section: The Chive
President Barak Obama announced that his administration will not extend additional federal loans requested by Lake Forest College's president and board of trustees, a move that will likely drive the institution to liquidate its assets and unwind risky students.
"It will not be the policy of the United States to throw good money after bad," the President remarked during a brief press conference yesterday at the Whitehouse, adding that the student body at Lake Forest, "has now become a liability to the long-term prospects of the institution and must be sold off to investors." Junk-rated students will likely be sold at auction to U.S. and foreign banks.
The board of Lake Forest College first approached the federal government for emergency funding in October of last year just as the housing crisis was accelerating. More students that applied to the school had been granted admission than ever before, due in large part by lax lending standards by the Office of Financial Aid. Lavish aid packages were granted to students with zero credit and with no checks on employment or future ability to pay.
"We simply got carried away," said former head of the school's Office of Financial Aid Jerry Cebrzynski when pressed on how the situation had originated. "Every major institution was lending furiously and giving out unbelievable sums of money to students, knowing they had less-than-perfect standing, including LFC." Cebrzynski defended his role in the crisis by pointing out the fact that going to college was the fulfillment of the American dream, much like owning an overvalued house. He was recently ousted at the behest of the President for overseeing the College's downward spiral. He and friend Rick Wagoner, ex-General Motors CEO, held a joint going-away party at Chicago's Palmer House Hilton.
Lake Forest College received millions of dollars of taxpayer money after being unable to meet its financial aid obligations in the second half of 2008. Congress initially agreed to grant the school $200 million from the Troubled Asset Relief Program to cover the day-today debt obligations, after acknowledging that investment in students was a poor decision. Lawmakers shamed the College's financial aid arm, blaming them for shortsighted decisions based on irrational confidence in the education market.
"It will not be the policy of the United States to throw good money after bad," the President remarked during a brief press conference yesterday at the Whitehouse, adding that the student body at Lake Forest, "has now become a liability to the long-term prospects of the institution and must be sold off to investors." Junk-rated students will likely be sold at auction to U.S. and foreign banks.
The board of Lake Forest College first approached the federal government for emergency funding in October of last year just as the housing crisis was accelerating. More students that applied to the school had been granted admission than ever before, due in large part by lax lending standards by the Office of Financial Aid. Lavish aid packages were granted to students with zero credit and with no checks on employment or future ability to pay.
"We simply got carried away," said former head of the school's Office of Financial Aid Jerry Cebrzynski when pressed on how the situation had originated. "Every major institution was lending furiously and giving out unbelievable sums of money to students, knowing they had less-than-perfect standing, including LFC." Cebrzynski defended his role in the crisis by pointing out the fact that going to college was the fulfillment of the American dream, much like owning an overvalued house. He was recently ousted at the behest of the President for overseeing the College's downward spiral. He and friend Rick Wagoner, ex-General Motors CEO, held a joint going-away party at Chicago's Palmer House Hilton.
Lake Forest College received millions of dollars of taxpayer money after being unable to meet its financial aid obligations in the second half of 2008. Congress initially agreed to grant the school $200 million from the Troubled Asset Relief Program to cover the day-today debt obligations, after acknowledging that investment in students was a poor decision. Lawmakers shamed the College's financial aid arm, blaming them for shortsighted decisions based on irrational confidence in the education market.
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