“Ninety percent of students choose a lender from their institution’s preferred lender’s list,” said Lawsky, “Fifty percent of the 90 percent choose the first lender on the list; however the lenders on the preferred list are not necessarily the best lenders for students.”

While the financial benefits from these partnerships could assist the institution in other avenues, “the problem with them is that they create an incentive for the school to load up its students with debt,” says Michael Dannenberg, an education program policy director for the New America foundation. “The school is funneling its students to the lenders.”

Alumni and board of trustee members must hold institutions accountable for the money it spends and the way the institutions choose to allocate it. “Every trustee member must be an auditor,” says Stephen Smith, a Dartmouth College trustee and alumnus. “You need to monitor what’s going on.”

Oftentimes the role of the trustee is limited to hiring and firing the university’s president and passing the budget. “I reject that minimalist definition. We are the institution,” says Smith, noting that trustees play a very important role in setting the university agenda for the future, helping administrators and faculty carryout the mission and the vision of the institution and maintaining the institution’s high educational quality.

Since 2005, American University has restructured its system of governance in a format that includes all the stakeholders: students, faculty, alumni and administrators. The board has been reorganized to include two non-voting faculty members and one non-voting student.

To promote transparency, the board developed a Web site to keep students and faculty members engaged in the decision making of board members.

“I believe that the governance changes at American University have been great successes and can be used as models for a modern, transparent governance structure. Every constituency has an opportunity to speak,” says Arthur Rothkopf, a board of trustee member at American University and senior vice president and counselor to the president at the U.S. Chamber of Commerce.