THE COLLEGE MONEY GRAB

How did one of the world's largest banks get tripped up by a college financial aid business to the tune of $175 million? Just ask any parent who has jumped through insane hoops to get their kid into good schools and then had to run the most daunting gauntlet of all: paying for it.

- NICOLE LAPORTE

In January, when it was revealed that a college financial planning startup called Frank, which JP  Morgan had acquired for $175  million, had allegedly scammed the bank by wildly goosing its user numbers, shockwaves reverberated through higher education circles. The news was all the more titillating because Frank, which claimed to have helped millions of students, was founded in 2017 by a 24-year-old woman named Charlie Javice, a budding entrepreneur from Westchester County with shampoo commercial hair and a smooth MBA patois honed at Penn’s Wharton School. Javice seemed every bit the business wunderkind, earning slots on Forbes’s 30 Under 30 and Fast Company’s Most Creative People lists.

The questions on everyone’s mind were: If the allegations are true, how could one of the world’s most venerable financial institutions have been duped by a millennial Wharton grad? Was it another Elizabeth Holmes tale, only set in the decidedly unsexy world of college financial aid? (Javice has said through her lawyer that the claims, which are included in a lawsuit filed by JP Morgan, are untrue.) According to JP Morgan’s complaint, in pitch materials, spreadsheets, and verbal presentations during the bank’s negotiations with Javice, she claimed that 4.25 million students had registered to use Frank. This number was enticing to JP Morgan, which was trying to grow its market of college-age students. When JP Morgan asked for proof of the accounts, Javice allegedly hired a data science professor to generate a fake customer list. The bank claims it had no idea Javice was nearly 4 million real customers short.