Hey, Brown Daily Herald and NY Times, look right in front of your nose.

First, I’m glad that the Brown Daily Herald did some digging about their esteemed President, Ruth Simmons, and the $320k+ she used to get for serving on the Board of Directors of Goldman Sachs. And I’m also glad that the Herald was able to dig deeply enough to figure out that she’ll leave the board with more than $4m in Goldman stock. The smart kids at Brown even came up with the usual politically correct reasons for why this isn’t a good thing for a university President to be doing in her spare time: as far as I can tell, it’s not cool to be too rich. Good job. The NY Times’s Graham Bowley picked up the debate and just published the news in the paper — just after President Simmons wisely scooped them all by announcing she wouldn’t serve another term because it was taking up too much time. (For a defense of her place on the board, see here.)

But like dudes, you missed the biggest red flag of all: Goldman Sachs floated billions of dollars of bonds for Sallie Mae, the company that’s turning increasingly mean to former undergraduates who can’t keep up the payments on their private loans. That means while Simmons was jacking up tuition and smiling kindly while introducing incoming students to the nice loan shark, I mean “financial aid officer”, Simmons was also cashing checks from Goldman and profiting from the fees collected from securitizing those very same loans. Bravo Ruth!

I’m tempted to put on the mantle of a conspiracy mongering, politically correct undergraduate. Where there’s millions of dollars in cash, it’s easy to rile up the mob. Alas, I don’t really blame Dr. Simmons or any of the other college honchos sitting on boards (there must be hundreds in the same boat). The old conspiracy masters like to imagine a scene where Dr. Simmons is lunching with her Goldman buds in some impossibly expensive restaurant:

Goldman Quant: The Hermes scarf looks very good on you.

Simmons: Why thank you. I was inspired by the Hermes tie you wore to our last meeting. The one with all of those tiny diamonds stuck in the middle of the rosettes.

Quant: That’s very polite of you to notice. I’ll tell my wife. Or was it one of my ex-wives who bought it for me? I don’t remember. More champagne?

Simmons: Why yes!

Quant: Now that we’re finished with the whale heart sushi, let’s get down to business. [burp] We’ve run the numbers. In order for us to make higher fees, we’ve got to loan more money. So you’ve if we want to to bump up your stock holdings $200k, we need you to boost tuition 4.95% over the rate of inflation plus the LIBOR.

Simmons: But I want a new yacht to match your yacht. Yours is 542 feet long and I want one that’s 543 feet long.

Quant: Competitive. I can respect that.

Simmons: Well?

Quant: [Punches keys on diamond encrusted iPhone] Okay, it looks like you’ll need to push up tuition 6.223%. Give or take .004%. I’ll know better when I get back to the office.

Simmons: Done! Let’s drink some more.

Let me be clear. These conspiracy theorists are wrong. This didn’t happen. Nothing like it did. The real problem is a perfect illustration why the road to perdition is paved with good intentions. Everyone wanted to have super fancy campuses.The short-sighted bankers saw that student loans are generally paid off– student are suckers for high rates of interest on their so-called “aid”. Meanwhile someone deposited some money in a bank and went to the bank that paid the highest interest. So Goldman and Sallie Mae helped the passbook holder get a nice rate of return. The bankers probably thought they were doing God’s work by connecting the two and arranging for the risk of default to be spread out among all of the Grandmas with passbooks holding their Christmas Club account.

As for Dr. Simmons, I doubt she mattered much at all. It was a part time job and that job was to lend a bit of polish to the machinery. I doubt anyone asked her much about Sallie Mae bonds and if they did, I’m sure she parroted the standard line from the college industrial complex: more money for loans increases access to education for everyone.

Now that Dr. Simmons is leaving the board, I hope she’ll have the time to put the Talking Heads’ “Once in a Lifetime” — David Byrne and Chris Franz burnt tuition money across town in Providence at RISD. Notice the line “My God, what have I done?”, one that always reminds me of that scene in “Bridge Over the River Kwai” when Alec Guiness’s character discovers that his enthusiasm for engineering lead him to build the very bridge that would help the Japanese succeed in WWII. When Guiness discovers that his masterpiece was essentially a betrayal of his country and her citizens, he blows up the bridge and says, “My God, what have I done?”

The British prisoners got caught up in the excitement of engineering a perfect solution– and that’s probably the same thing that happened to Dr. Simmons and the folks at Goldman Sachs. They said: let’s make it easy for any kid to enjoy a fancy, country-club campus with latte bars and flat screen TVs everywhere. No one cared if the kids were mortgaging their future?

But now that she’s got more time, I hope she’ll dig into the difficult stories of the kids who are being squeezed by Sallie Mae. Here are a few:

Fruzsina Eordogh at WalletPop: “In total, I borrowed approximately $43,000 from Sallie Mae, with an average interest rate of 9.5%. As of today, I have already accrued $22,525 in interest (on $43,000!), and the estimated total amount to be paid should I follow the monthly payment plans will be $123,350.”
Caroline: “why do I sign onto my online account nearly every month to find that (1) my check was cashed for the correct amount, but (2) someone in Sallie Mae “mistyped” the amount into my account and now I’m late by 2 or 5 cents.”
FML: ” After paying over $15,000 in the past year, the $175,000 balance of my student loans has gone up, not down, even though I have never missed a payment or even been late.“

I could go on, but I’m getting too sad.