What did LendEDU, which purports to have been created to “offer transparency in the student-loan market,” have to gain from this set-up? The company makes money when people use it to apply for financial products, or are approved for them, including refinancing their student loans, so it makes sense that it would be to the company’s advantage to promote the idea in the media that refinancing is the “best thing” for certain people. This isn't an inherently troubling message—for many people, refinancing is indeed the right move—but the promotional approach was less than forthcoming.
Most companies of course want to get their promotional messages across to the public, but the student-loan industry in particular is one that has a large—and anxious—ready-made audience, many members of which regularly turn to media reports for reliable, objective advice. Oftentimes, people are unaware of their options, including plans like income-driven repayment, which adjusts one’s loan payments based on how much money one makes. The opaque process of managing student debt can be confusing, and LendEDU’s strategy seized upon that confusion to encourage people to consider courses of action, including refinancing, that would make the company money.
The company’s message, delivered via Cloud, was crafted to reassure readers. “The statistics are grim. There is $1.3 trillion in outstanding student-loan debt in the United States, held by 44 million people,” Cloud wrote in a column. But there was hope: “If you’re stuck paying a high interest rate,” he wrote, “you should consider refinancing your student loans.” In a separate column, he wrote, “Debt is a four letter word, and one that can leave you feeling anguished and frustrated,” before again suggesting refinancing to “overcome the challenge of paying these loans.”
Cloud’s stint as a real person ended on Tuesday, when The Chronicle of Higher Education reported that it had tried to speak with him about a suspect survey indicating that some college students were using student-loan money to buy bitcoin. Chris Quintana, a reporter at the Chronicle (and my former colleague) was skeptical of the findings and reached out to Cloud, who responded a day after the news outlet published a story questioning the findings, that he had been traveling and unable to check his email. He signed the response, “—best, Drew.” Quintana, still skeptical, offered to meet Cloud in person and also inquired as to where Cloud had gone to college. His inquiry was met with silence.
At that point, Quintana told me when I interviewed him about the ordeal, the idea that Cloud was fake still seemed absurd. It didn’t seem likely to him that he was a fabrication. After all, there was such an elaborate persona: Cloud had been a staple of education and finance reporters’ inboxes—follow-up after follow-up after follow-up—over the past year. One reporter shared a string of unread emails from Cloud, all pushing various Student Loan Report studies. But if a reporter did respond to a message from Cloud, Cloud seems never to have gotten on the phone. “Drew strictly communicated through email,” Nate Matherson, who runs LendEDU, told me in an e-mail. Still, he always had a strong statement on the results of a survey—things like, “Living on a tight budget, one would think students would spend that money on groceries, rent or school supplies rather than bitcoin and ethereum.” And at least a handful of colleges touted the findings of Cloud and Student Loan Report in press releases.