Vincent L. Leibell > STUDENT LOAN ACT INFORMATION

Wednesday, January 07, 2009

New York State Senator
Vincent L. Leibell	40th Senate District

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STUDENT LOAN ACT INFORMATION

Recently, the Attorney General announced he was investigating over 100 schools and more than six lenders for deceptive and sometimes illegal practices within the loan industry. Legal action has been initiated against San Francisco-based Education Finance Partners. Additionally, settlements have been announced with lenders and colleges, and many schools have agreed to adopt the Attorney Generals College Lending Code of Conduct, which details guidelines/prohibitions of:

Revenue sharing (where lenders provide "kickbacks" to colleges based on the number and amount of loans steered their way)

Gift and trip prohibitions

Advisory board compensation rules

"Preferred lender" guidelines and disclosures

Loan resale disclosures

Call-center prohibitions

The Student Lending, Accountability, Transparency and Enforcement Act:

Prohibits lenders from making gifts – including the practice of revenue sharing – to colleges and universities or their employees in exchange for any advantage in loan activities

Bans colleges and universities from soliciting, accepting or receiving any gifts whatsoever – including those construed as part of a revenue sharing practice – from lenders in exchange for advantageous loan consideration

Bars college and university employees from receiving any advantage, reimbursement or benefit from serving as a member of a lender’s advisory board

Prohibits lender employees and agents from posing as college or university employees, including staffing the school’s financial aid offices with lender employees

Bans lenders and schools from agreeing to certain quid-pro-quo high-risk loans that prejudice other borrowers or potential borrowers

Prohibits schools from linking or directing potential borrowers to any electronic master promissory notes or other loan agreements that do not allow students to enter a lender code or name for any lender offering the relevant loan at that guarantee agency

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