University Business - July 2007 - (Page 41)

V NANN I F I E W P O I CT A L A I D Student Loan Sunshine Act Preparation While it’s not legislation yet, it’s not too early to get institutions ready for compliance. By Haley Chitty HE RECENT SCRUTINY OF relationships between colleges and student loan companies has sparked an explosion of guidance to eliminate any appearance of conflicts of interest in the student loan program. Legislation passed by Congress and signed into law, however, will trump any other guidance. The House of Representatives has taken the lead by passing the Student Loan Sunshine Act (H.R. 890), a bill that still has to be approved by the Senate and signed by President Bush, making it impossible to know exactly what the final law (if any) will include. Nevertheless, the House bill offers a good indication of the practices financial aid offices—and other agents of the college, including alumni associations, booster clubs, or other organizations directly or indirectly associated with the institution—will have to adopt. What preparations should they make for this or similar legislation that Congress is expected to pass this year? Read on. CODE OF CONDUCT Each institution would be required to develop and display on its website a code of conduct with these provisions: • Lenders and affiliates would be prohibited from giving any financial benefits (including the chance to purchase stock) to employees with any financial aid responsibility as compensation for consulting services, advisory council service, or otherwise advising lenders. • Institutions would be prohibited from recommending a lender in exchange for the lender providing material benefits to the institution or its employees. T Gifts—including any gratuity, favor, discount, hospitality, or loan— would be prohibited. • Lenders, guarantors, or servicers would be prohibited from offering gifts to institutional employees—including any gratuity, favor, discount, entertainment, hospitality, loan, or other item valued at more than a nominal amount. Examples are gifts of services, transportation, lodging, or meals. The term “gift” would not apply to informational material related to loans or financial literacy (e.g., a brochure). Similarly, food, refreshments, training, or informational material that is an integral part of a training session designed to improve the lender’s service or contribute to professional development of the institution’s employees would be allowed. Counseling provided to borrowers for exit counseling would also be allowed, provided that an institution’s staff controls the counseling and that the counseling doesn’t favor a single lender. • Lenders could not give gifts to em- ployees’ family and friends if such gifts were given with the employee’s knowledge and consent and if the employee had reason to think the gift was because of his or her position. • Lenders could not provide staff for call centers or financial aid offices, unless this were related to professional development training, or providing educational counseling materials, financial literacy materials, or debt management materials to borrowers. (These materials must disclose who provided them.) • Institutions would be prohibited from requesting, accepting, or considering any private loan funds from a lender in exchange for the institution providing concessions or promises to the lender. • Financial aid staff would be prohibited from participating in lender advisory councils. Lenders could seek advice from employees to improve products and services for borrowers, as long as no compensation (including for transportation, lodging, etc.) was provided. • All employees with student aid responsibilities would have to be trained annually on code of conduct compliance. The Department of Education’s inspector general would investigate reported violations and annually submit a report to the Senate and House education committees that identified reported violations of the gift ban, including the lenders involved in each violation. THE MODEL DISCLOSURE FORM The bill would require the secretary Haley Chitty is assistant director of communications at NASFAA, www.nasfaa.org. universitybusiness.com 41 | July 2007 http://www.nasfaa.org http://universitybusiness.com

Table of Contents for the Digital Edition of University Business - July 2007

Contents
College Index
Company Index
Advisory Board
Editor's Note
People Watch
Sense of Place
Marketing
Viewpoint
Human Resources
Money Matters
Financial Aid
Community Colleges
Seeds of Scandal
Controlling the Flow
Special Delivery
Presidential Progress
Best Foot Forward: SOX and Financial Standards
Business Technology
What's New
Calendar of Events
Direct Connect
End Note

University Business - July 2007

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