Schools adopt code for student lending

[asteriskea]

<p>In the wake of the Cuomo inquiry into revenue-sharing</p>

<p>

A new code of conduct for loan arrangements adopted by three dozen schools and a student loan provider “will ensure integrity in the student loan process,” state Attorney General Andrew Cuomo said Monday.</p>

<p>Six of the schools have also agreed to reimburse students a total of $3.27 million. And Citibank, which does business at about 3,000 schools, agreed to put $2 million toward a national fund that would educate students and parents about the financial-aid industry.</p>

<p>The schools – all 29 four-year State University of New York campuses, including University at Albany, New York University, University of Pennsylvania, St. John’s University, Syracuse University, Fordham University, St. Lawrence University and Long Island University – agreed to the code as part of settlements of the nationwide probe by Cuomo’s office into student lending. None of the schools admitted any wrongdoing.</p>

<p>Cuomo’s investigation found that many colleges established questionable “preferred lender” lists, and entered into revenue sharing and other financial arrangements with those lenders…</p>

<p>Henahan stressed SUNY’s full cooperation in Cuomo’s probe and hailed the new code of conduct as a step that would “strengthen the confidence of students and parents in college lending practices.”</p>

<p>Cuomo’s investigators say they have found numerous arrangements that benefited schools and lenders at the expense of students. In some cases, investigators said, lenders provided all-expense-paid trips for college financial-aid officers to exotic locations in return for directing students to the lenders.</p>

<p>Six lenders and more than 100 public and private colleges have been swept up in Cuomo’s investigation into the $85 billion college loan industry. The remaining schools and banks are still under investigation, Milgrim said.</p>

<p>Monday’s agreements ban lenders from giving gifts to schools in exchange for any advantage in landing loan business. College officials will be prohibited from taking any gifts of more than nominal value from lenders and will be prohibited from getting any compensation for serving on any private loan company advisory boards, Milgrim said.</p>

<p>The schools must also make sure students know what criteria are used for lenders to get onto any preferred-lender list, and that lenders that aren’t on the list also can be used.</p>

<p>The University of Pennsylvania will pay $1.62 million to reimburse students for added loan costs caused by revenue sharing agreements. New York University will give $1.39 million back to students, while Syracuse University, Fordham University and St. John’s University will pay lesser amounts, Milgrim said…

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<p><a href=“http://timesunion.com/AspStories/story.asp?storyID=577494&category=STATE&BCCode=&newsdate=4/3/2007&TextPage=2[/url]”>http://timesunion.com/AspStories/story.asp?storyID=577494&category=STATE&BCCode=&newsdate=4/3/2007&TextPage=2&lt;/a&gt;&lt;/p&gt;

[NikkiiL]

<p>Problem with this Code of Conduct…may of these items already exists within the Federal Regulations. Unnecessary redundancy and wasted tax dollars spent investigating and writing this code.</p>

<p>But there is one major drawback with this code…don’t expect your Financial Aid Counselors to stay informed on the new regulations. FA Conferences, usually held annually, are funded by lenders and guarantee agencies and provide most Financial Aid Administrators and Counselors with the necessary training to stay current on all of the changing regulations. With this Code of Conduct, FA personnel will no longer be allowed to attend lender sponsored events…which means NO MORE TRAINING!</p>

<p>Also, because of the broad terminology used in this Code of Conduct, schools will also be prevented from having lenders print materials for the FA Office…a practice commonly done as a way to conserve funds at private institutions. I know in our office, we have each lender print different material which is used throughout the application process and save the college at least $25,000.00 each year. So, be prepared to see tuition rates climb even higher as schools enlarge their budgets to print envelopes, letterheads, and other necessary forms.</p>

<p>In the end…the only ones who are truly being hurt by this code are the students and their parents.</p>