For those students fortunate enough to have parents that can afford to invest in our college future, a lot depends on those funds to get us through our duration as students. If a parent squanders the money, or makes a bad investment, a student could be, for lack of better words, screwed out of an education.
However, there is no real punishment for a parent being foolish with their children’s college savings, other than the child possibly cutting ties with them. What happens, though, to a company that squanders these savings?
After a three-month investigation, the state of Oregon found that Oppenheimer Funds, an investment company, had been moving money from conservative accounts into much riskier ones in an effort to bulk up profits.
Oppenheimer, one of the most popular (and apparently greedy) college-savings plans in Oregon, is accused of violating Oregon securities law, breach of contract, breach of fiduciary duty, negligence and negligent misrepresentation.
The state is suing Oppenheimer for $36.2 million in restitution.
Oppenheimer needs a good palm to the forehead! It would be one thing if someone who did not have much knowledge of the financial world had done such a thing in hopes to make money quickly, but an organization that has been handling these matters for many years? What was going on in the heads of those in charge?
Was it greed or stupidity that caused this move? I’m leaning on the side of greed. Surely those making the financial decisions at Oppenheimer knew the risks and plunged ahead out of voracity to make a buck, rather than concern for the future of education. These weren’t people who had no idea what they were doing—they were financial professionals and they misused the trust of their customers.
Unfortunately, Oppenheimer is under contract to manage these funds until December. That’s eight more months that this company is able to “mismanage” hard-earned dollars from scrupulous families.
It’s difficult to imagine an upside to all of this, but the state of Oregon does plan to reimburse families for their losses with the suit money. “We intend to use the full legal power of the state of Oregon to make sure Oregon families’ dreams of a college education are fulfilled,” said Attorney General John Kroger.
This situation can also provide a lesson in money management. For future generations of college-bound kiddos, think about a regular savings account. If you get a decent interest rate, even $50 a month for each month the child is alive can add up. Without interest that is $10,800! It also encourages children to learn about saving and be more responsible with their money.
Of course none of this excuses Oppenheimer from what it’s done. Families should absolutely be able to trust their money to a reputable savings plan, and be sure that this money will go toward the investment of their children’s futures. Unfortunately, that trust is not always rewarded.
Investing may look like a great way to bulk up the college trust fund, but as long as you can invest money, there will be companies there like Oppenheimer who will take advantage of that. Plan ahead for these situations and keep your money safe.