USM Board of Regents Adopts College Loan "Code of Conduct"
ADELPHI, Md. (June 22, 2007) - The University
System of Maryland (USM) Board of Regents unanimously approved a new college
loan "Code of Conduct" during its annual meeting today at the University of
Maryland, College Park. Drafted by Maryland Attorney General Douglas Gansler in
consultation with students and leaders in Maryland higher
education, the "Code of Conduct" will help to ensure integrity and transparency
in the operations of the system's financial aid offices.
"I am very pleased that the board has adopted this code for USM," said
Chancellor William E. Kirwan. "Financing a college education can be a daunting
and confusing experience for students and their families. They deserve the most
fair, reliable, and objective information and counsel about student loans that
is possible. This code will help ensure that."
The college loan "Code of Conduct" is part of a nationwide effort to
improve the integrity of the student loan process. The lending industry
has been scrutinized by Senate and House committees, and New York
State Attorney General Andrew Cuomo has investigated and entered into
settlements with
several universities and lenders accused of unethical practices and
conflicts-of-interest.
To date, no irregularities in USM institutions' lender relationships
have been found.
Among the items covered by the Attorney General's seven-point "Code of
Conduct" are restrictions on revenue sharing and accepting gifts and trips from
lending institutions; criteria and disclosure requirements for preferred lender
lists; and restrictions on the practices of lender call-centers.
The following is the complete text of the Attorney General's college
loan "Code of Conduct" adopted by USM
(also available as a PDF File):
1. Revenue Sharing
Restrictions
Colleges may not receive
anything of value from any lending institution in exchange for any advantage
sought by the lending institution. Lenders cannot pay to get on a school's preferred
lender list.
2. Gift and Trip Restrictions
College employees may not take anything, including
trips, of more than nominal value from any lending institution, when such
things are offered in connection with the employees' financial aid work.
3. Advisory Board Compensation Rules
College employees with responsibility for financial
aid work may not receive anything of value for serving on the advisory board of
any lending institution.
4. Preferred Lender Guidelines
College preferred lender lists must be based solely on
the best interests of the students who may use the list without regard to financial
interests of the college.
5. Preferred Lender Disclosure
On all preferred lender lists the college must clearly
and fully disclose the criteria and process used to select preferred lenders.
Students must also be told that they have the right and ability to select the
lender of their choice regardless of the preferred lender list.
6. Loan Resale Disclosure
Colleges may not permit a lender to appear on a
preferred lender list unless the lender agrees to disclose to the student at
the time of the loan any pre-existing agreement to sell the loan to another
lender.
7. Call-Center Restrictions
Colleges may not permit employees or agents of lenders
to identify themselves to students as employees of the colleges. No employee or
agent of a lender may be employed by a college financial aid office.
Contact: John Buettner
Phone: 301.445.2719
Email: jbuettner@usmd.edu
