nasfaa statement of ethical principles and code of conduct forinstitutional financial aid...

NASFAA Statement of Ethical Principles NASFAA Statement of Ethical Principles

andand

Code of Conduct Code of Conduct

forfor

Institutional Institutional

Financial Aid ProfessionalsFinancial Aid Professionals

Dave Gruen, Director

Student Financial Aid

University of Wyoming

NASFAA National Chair-Elect

NASFAANASFAAStatement of Ethical PrinciplesStatement of Ethical Principles

Adopted April 1999Adopted April 1999

Provides that the primary goal of the Provides that the primary goal of the institutional financial aid professional is to institutional financial aid professional is to help students achieve their educational help students achieve their educational potential by providing appropriate financial potential by providing appropriate financial resources. resources.

To this end, this To this end, this Statement Statement provides that provides that the financial aid professional shall:the financial aid professional shall:

NASFAA NASFAA Statement of Ethical PrinciplesStatement of Ethical Principles

1.1. Be committed to removing financial Be committed to removing financial barriers for those who wish to pursue barriers for those who wish to pursue postsecondary learning. postsecondary learning.

2.2. Make every effort to assist students with Make every effort to assist students with financial need. financial need.

3.3. Be aware of the issues affecting students Be aware of the issues affecting students and advocate their interests at the and advocate their interests at the institutional, state, and federal levels.institutional, state, and federal levels.


4.4. Support efforts to encourage students, Support efforts to encourage students, as early as the elementary grades, to as early as the elementary grades, to aspire to and plan for education beyond aspire to and plan for education beyond high school.high school.

5.5. Educate students and families through Educate students and families through quality consumer information.quality consumer information.

6.6. Respect the dignity and protect the Respect the dignity and protect the privacy of students, and ensure the privacy of students, and ensure the confidentiality of student records and confidentiality of student records and personal circumstances.personal circumstances.

7.7. Ensure equity by applying all need Ensure equity by applying all need analysis formulas consistently across the analysis formulas consistently across the institution’s full population of student institution’s full population of student financial aid applicants.financial aid applicants.

8.8. Provide services that do not discriminate Provide services that do not discriminate on the basis of race, gender, ethnicity, on the basis of race, gender, ethnicity, sexual orientation, religion, disability, age, sexual orientation, religion, disability, age, or economic status.or economic status.


9.9. Recognize the need for professional Recognize the need for professional development and continuing education development and continuing education opportunities.opportunities.

10.10. Promote the free expression of ideas and Promote the free expression of ideas and opinions, and foster respect for diverse opinions, and foster respect for diverse viewpoints within the profession.viewpoints within the profession.



11.11. Commit to the highest level of Commit to the highest level of ethical behavior and refrain from ethical behavior and refrain from conflict of interest or the conflict of interest or the perception thereof.perception thereof.

12.12. Maintain the highest level of Maintain the highest level of professionalism, reflecting commitment professionalism, reflecting commitment to the goals of the National Association to the goals of the National Association of Student Financial Aid Administrators.of Student Financial Aid Administrators.

Cuomo took office in January 2007Cuomo took office in January 2007

Former AG Spitzer left potential targets for Former AG Spitzer left potential targets for investigationinvestigation– Initial investigation in November ’06 of Initial investigation in November ’06 of

relationships between lenders & colleges relationships between lenders & colleges yielded a response by EFP that it’s business yielded a response by EFP that it’s business model paid colleges a proportion of their model paid colleges a proportion of their students’ private loan volume in exchange for students’ private loan volume in exchange for a place on the colleges’ list of ‘preferred a place on the colleges’ list of ‘preferred lenders’.lenders’.

SO WHAT HAPPENED??!!

SO WHAT HAPPENED??!!

– ‘‘Aha moment!’Aha moment!’ – EFP gives schools a cut of – EFP gives schools a cut of the profits in exchange for preferential the profits in exchange for preferential treatment.treatment.

– How many schools – about 100How many schools – about 100– Cuomo’s team believed this represented a Cuomo’s team believed this represented a

clear conflict of interest – and possibly a clear conflict of interest – and possibly a violation of state consumer protection law.violation of state consumer protection law.

– Why? Because students were not told of the Why? Because students were not told of the arrangement – the absence of disclosure and, arrangement – the absence of disclosure and, therefore, the lack of choice.therefore, the lack of choice.

SO WHAT HAPPENED??!!February 1February 1stst – letters to other lenders and – letters to other lenders and dozens of clients of EFP.dozens of clients of EFP.March – Cuomo accuses lenders and March – Cuomo accuses lenders and colleges of engaging in an colleges of engaging in an ‘unholy ‘unholy alliance’alliance’ in which in which ‘deceptive practices’‘deceptive practices’ that have the potential forthat have the potential for ‘ ‘conflicts of conflicts of interestinterest’’– some that – some that ‘may break the law’‘may break the law’ – are widespread.– are widespread.Investigation lights spark under Sen. Investigation lights spark under Sen. Kennedy and Representative Miller Kennedy and Representative Miller leading to the introduction of legislation.leading to the introduction of legislation.

SO WHAT HAPPENED??!!Cuomo characterized his goals as far exceeding Cuomo characterized his goals as far exceeding the stereotypical law enforcement mission of the the stereotypical law enforcement mission of the AG, focusing instead on AG, focusing instead on ‘problem solving’ – ‘problem solving’ – altering behavior, moving the market, and driving altering behavior, moving the market, and driving new policies.new policies.

Findings suggested:Findings suggested:– that there were indications of a that there were indications of a ‘quid pro quo’‘quid pro quo’

relationship among certain partiesrelationship among certain parties– that transparency or full disclosure was lacking, andthat transparency or full disclosure was lacking, and– that, in some instances, borrowers’ choices were that, in some instances, borrowers’ choices were

minimizedminimized

NASFAA’s ResponseNASFAA’s Response

In March Dallas Martin sent a letter to In March Dallas Martin sent a letter to Cuomo accusing him of using rhetoric Cuomo accusing him of using rhetoric ‘designed to ‘designed to inflameinflame rather than to inform, rather than to inform, and to and to exaggerateexaggerate rather than illuminate.’ rather than illuminate.’ – Martin also demanded an Martin also demanded an apologyapology for for

‘unwarranted character assassination of ‘unwarranted character assassination of public servants who only want to do what is public servants who only want to do what is best for their students and their families.’best for their students and their families.’

Aid Community ResponseAid Community Response

Many believed Cuomo’s statements were Many believed Cuomo’s statements were overstated and unfairly raised suspicions about overstated and unfairly raised suspicions about the professional conduct and ethics of all the professional conduct and ethics of all financial aid administrators.financial aid administrators.Practices being criticized were not only long-Practices being criticized were not only long-established and accepted, but plainly legal established and accepted, but plainly legal under federal law. under federal law. Most schools were aggrieved that they were Most schools were aggrieved that they were bashed for the revenue sharing agreements, bashed for the revenue sharing agreements, which they saw as a creative source of financial which they saw as a creative source of financial aid for needy students at a time of flat federal & aid for needy students at a time of flat federal & state budgets.state budgets.

What FollowedWhat FollowedUnfortunately the actions of a few came to Unfortunately the actions of a few came to represent us all.represent us all.

Other state attorneys general and Congressional Other state attorneys general and Congressional leaders launched their own investigations into leaders launched their own investigations into school practices.school practices.

May 30May 30thth – New York passes the SLATE Act – New York passes the SLATE Act (Student Lending Accountability, Transparency (Student Lending Accountability, Transparency and Enforcement Act)and Enforcement Act)– The SLATE Act was the first to define “lender” to The SLATE Act was the first to define “lender” to

include any professional association that accepts include any professional association that accepts sponsorship monies from lenders or guarantors.sponsorship monies from lenders or guarantors.

AG Cuomo’s Code of ConductAG Cuomo’s Code of Conduct

1.1. Revenue Sharing ProhibitionRevenue Sharing Prohibition

2.2. Gift and Trip ProhibitionGift and Trip Prohibition

3.3. Advisory Board Compensation RulesAdvisory Board Compensation Rules

4.4. Preferred Lender GuidelinesPreferred Lender Guidelines

5.5. Preferred Lender DisclosurePreferred Lender Disclosure

6.6. Loan Resale DisclosureLoan Resale Disclosure

7.7. Call-Center ProhibitionCall-Center Prohibition

NASFAANASFAACode of ConductCode of Conduct

Adopted May 24, 2007Adopted May 24, 2007

Code of ConductCode of ConductDevelopment ProcessDevelopment Process

April – NASFAA’s Board met in Charlotte.April – NASFAA’s Board met in Charlotte.

The Board adopted a resolution to:The Board adopted a resolution to:– promulgate a Code of Conduct to provide explicit promulgate a Code of Conduct to provide explicit

guidance in carrying out NASFAA’s Statement of guidance in carrying out NASFAA’s Statement of Ethical PrinciplesEthical Principles

– review the Association’s business practicesreview the Association’s business practices– establish a mechanism to inform, educate and advise establish a mechanism to inform, educate and advise

members regarding compliance with the Code, andmembers regarding compliance with the Code, and– called upon all members to review their school’s called upon all members to review their school’s

current practices to ensure practices that are free of current practices to ensure practices that are free of bias and based solely on the best interest of studentsbias and based solely on the best interest of students


A significant part of the BOD meeting was A significant part of the BOD meeting was used to develop a draft Code of Conduct.used to develop a draft Code of Conduct.– Lawyers were present to guide the Lawyers were present to guide the

discussion.discussion.– Each element of the Cuomo Code was Each element of the Cuomo Code was

reviewed by sub-groups of the Board to reviewed by sub-groups of the Board to determine if to incorporate the provision.determine if to incorporate the provision.

– Out of this discussion the provisions for a Out of this discussion the provisions for a draft Code was developed.draft Code was developed.

– Further adjustments were made by a sub-Further adjustments were made by a sub-group of the Board, the lawyers and NASFAA group of the Board, the lawyers and NASFAA personnel.personnel.


May 24May 24thth - Final Code of Conduct adopted by - Final Code of Conduct adopted by BoardBoard

May 29May 29th – th – NASFAA shared the Board-approved NASFAA shared the Board-approved documents with AG Cuomo’s office.documents with AG Cuomo’s office.

May 30May 30th – th – Dallas Martin held joint news Dallas Martin held joint news conference with AG Cuomo to publicly announce conference with AG Cuomo to publicly announce NASFAA’s Code of Conduct.NASFAA’s Code of Conduct.– A representative of the AG’s office was invited to A representative of the AG’s office was invited to

attend NASFAA’s Annual Conference and any other attend NASFAA’s Annual Conference and any other meetings they wish to attend for the next five years.meetings they wish to attend for the next five years.

Why Have a Code of Conduct?Why Have a Code of Conduct?

To establish To establish transparencytransparency to relieve the to relieve the perception of conflicts of interestperception of conflicts of interest

To define accepted/unaccepted behaviorsTo define accepted/unaccepted behaviors

To promote high standards of practiceTo promote high standards of practice

To provide a benchmark for members to To provide a benchmark for members to use for self-evaluationuse for self-evaluation

To establish a framework for professional To establish a framework for professional behavior and responsibilitiesbehavior and responsibilities

#11#11

Commit to the highest level of Commit to the highest level of ethical behavior and refrain ethical behavior and refrain

from conflict of interest or the from conflict of interest or the perception thereof.perception thereof.

NASFAA Statement of Ethical NASFAA Statement of Ethical PrinciplesPrinciples

In consideration of the complexity of the In consideration of the complexity of the tasks confronting institutional financial aid tasks confronting institutional financial aid professionals, the NASFAA Board of professionals, the NASFAA Board of Directors has promulgated this Directors has promulgated this Code of Code of ConductConduct to provide further guidanceto provide further guidance respecting the respecting the Statement of Ethical Statement of Ethical PrinciplesPrinciples..

NASFAA Code of ConductNASFAA Code of Conduct


The The CodeCode is intended to help guide is intended to help guide financial aid professionals in carrying out financial aid professionals in carrying out these obligations, particularly with regard these obligations, particularly with regard to to ensuring transparencyensuring transparency in the in the administration of the student financial aid administration of the student financial aid programs, and to programs, and to avoid the harmavoid the harm that may that may arise from arise from actual, potential, or perceived actual, potential, or perceived conflicts of interestconflicts of interest..


1.1. ““Refrain from taking any action for hisRefrain from taking any action for his or her personal benefit.”or her personal benefit.”

While performing one’s work in an While performing one’s work in an exemplary fashion should result in exemplary fashion should result in ““personal benefitpersonal benefit” in the form of ” in the form of professional advancement and recognitionprofessional advancement and recognition, , this provision obviously relates to actions this provision obviously relates to actions that are that are contrary contrary to the obligations the to the obligations the individual has to the institution and its individual has to the institution and its students and their parentsstudents and their parents..

This includes the individual, This includes the individual, or a member of their or a member of their familyfamily, never accepting cash payments, stocks, club , never accepting cash payments, stocks, club memberships, gifts, entertainment, expense-paid trips, memberships, gifts, entertainment, expense-paid trips, or other forms of inappropriate remuneration from any or other forms of inappropriate remuneration from any business entity involved in any aspect of student business entity involved in any aspect of student financial aid. financial aid.

It also relates to It also relates to actions which, while on balance may actions which, while on balance may be supportive of the financial aid professional’s work, be supportive of the financial aid professional’s work, are chosen from among alternatives are chosen from among alternatives because because they they also benefit the financial aid professionalalso benefit the financial aid professional



2. “Refrain from taking any action he or 2. “Refrain from taking any action he or she believes is contrary to law, she believes is contrary to law, regulation, or the best interests of the regulation, or the best interests of the students and parents he or she students and parents he or she serves.”serves.”

The statement – never taking action The statement – never taking action contrary to law or regulation – should be contrary to law or regulation – should be self-evident. self-evident.


However, However, note the use of the term “note the use of the term “believesbelieves to to be contrary to law [or] regulation.”be contrary to law [or] regulation.” The financial The financial aid professional works in a complex legal aid professional works in a complex legal environment. environment. Any doubts as to whether a Any doubts as to whether a course of conduct is legally proper should be course of conduct is legally proper should be resolved by referring the matter to the resolved by referring the matter to the institution’s legal advisors for guidanceinstitution’s legal advisors for guidance..


In addition, the individual should In addition, the individual should understand and adhere to all institutional understand and adhere to all institutional policies as well as other local, state or policies as well as other local, state or federal requirements that are applicable to federal requirements that are applicable to his or her conduct or job performance.his or her conduct or job performance.

NASFAA Code of ConductNASFAA Code of Conduct3. “Ensure that the information he or she 3. “Ensure that the information he or she

provides is accurate, unbiased, and provides is accurate, unbiased, and does not reflect any preference arising does not reflect any preference arising from actual or potential personal gain.”from actual or potential personal gain.”

When providing information, at all times When providing information, at all times

the key should be transparencythe key should be transparency. Students . Students and parents should be able to fully and parents should be able to fully understand their rights, obligations, and – understand their rights, obligations, and – of paramount importance – their of paramount importance – their alternatives.alternatives.

NASFAA Code of ConductNASFAA Code of Conduct A financial aid professional is expected to A financial aid professional is expected to

demonstrate transparency, completeness, and demonstrate transparency, completeness, and accuracy of information by ensuring that:accuracy of information by ensuring that:– Students and their parents understand they are not Students and their parents understand they are not

required to use any of the lenders on a “preferred required to use any of the lenders on a “preferred lender” list, are free to select the lender of their choice, lender” list, are free to select the lender of their choice, and understand the process for selecting a lender and and understand the process for selecting a lender and applying for a loan; applying for a loan;

– The school will promptly certify any loan from any The school will promptly certify any loan from any

lender selected by a borrower; lender selected by a borrower;

– The process through which “preferred lenders” are The process through which “preferred lenders” are

selected is fully disclosedselected is fully disclosed


– Borrowers are provided with consumer Borrowers are provided with consumer

information about the loan products offered by information about the loan products offered by

entities on a school’s “preferred lender” list. entities on a school’s “preferred lender” list.

Such information must include the disclosure of Such information must include the disclosure of

competitive interest rates, terms, and competitive interest rates, terms, and

conditions of federal loans; high quality loan conditions of federal loans; high quality loan

servicing; or additional benefits beyond the servicing; or additional benefits beyond the

standard terms and conditions for such loans. standard terms and conditions for such loans.

NASFAA Code of ConductNASFAA Code of Conduct– The process through which students execute The process through which students execute

Master Promissory Notes preserves a student’s Master Promissory Notes preserves a student’s

right to select the lender of his or her choice; right to select the lender of his or her choice;

– Lenders who are included in a “preferred lender” list Lenders who are included in a “preferred lender” list

disclose agreements to sell their loans to other disclose agreements to sell their loans to other

entities; andentities; and

– The selection of lenders for inclusion on a The selection of lenders for inclusion on a

“preferred lender” list is based solely on the best “preferred lender” list is based solely on the best

interests of the students and parents who may rely interests of the students and parents who may rely

on such a list. on such a list.

NASFAA Code of ConductNASFAA Code of Conduct4.4. ““Be objective in making decisions and Be objective in making decisions and

advising his or her institution advising his or her institution regarding relationships with any regarding relationships with any entity involved in any aspect of entity involved in any aspect of student financial aid.”student financial aid.”

Financial aid professionals must always Financial aid professionals must always be be fair-handedfair-handed when when recommending or recommending or entering into a business relationshipentering into a business relationship with with any entity offering a product or service any entity offering a product or service related to financial aid.related to financial aid.


Placement on a “preferred lender” list, Placement on a “preferred lender” list,

therefore, must not be based on benefits therefore, must not be based on benefits

provided to the institution, an employee of the provided to the institution, an employee of the

institution, or its students in connection with institution, or its students in connection with

loans not covered by such list. In the same loans not covered by such list. In the same

light, financial aid professionals should not light, financial aid professionals should not

arrange for alternative loan programs that arrange for alternative loan programs that

disadvantage students or parents who do not disadvantage students or parents who do not

receive such loans. receive such loans.


Transparency also requires that when a student Transparency also requires that when a student or parent has communication with what he or or parent has communication with what he or she believes to be the institution’s financial aid she believes to be the institution’s financial aid office that is precisely what should occur; no office that is precisely what should occur; no employee or agent of a lender should ever be employee or agent of a lender should ever be identified, either directly or by implication, as an identified, either directly or by implication, as an employee or agent of the institution.employee or agent of the institution.


5. 5. “Refrain from soliciting or accepting anything “Refrain from soliciting or accepting anything of other than nominal value from any entity of other than nominal value from any entity ((other than an institution of higher education other than an institution of higher education or a governmental entityor a governmental entity such as the U. S. such as the U. S. Department of EducationDepartment of Education) involved in the ) involved in the making, holding, consolidating or processing making, holding, consolidating or processing of any student loans,of any student loans, including anything of including anything of value (value (including reimbursement of expensesincluding reimbursement of expenses) ) for serving on an advisory body or as part of a for serving on an advisory body or as part of a training activity of or sponsored by any such training activity of or sponsored by any such entity.”entity.”


This element is intended to avoid the This element is intended to avoid the appearanceappearance of of conflict of interest that arises when a financial aid conflict of interest that arises when a financial aid professional accepts benefits from a lending institution professional accepts benefits from a lending institution or similar entity. or similar entity.

The fact that the financial aid professional may have no The fact that the financial aid professional may have no intention to provide an advantage to the lender as a intention to provide an advantage to the lender as a result of the benefit he or she receives, and indeed result of the benefit he or she receives, and indeed does notdoes not provide any such advantage, is not the point. provide any such advantage, is not the point.


The benefit received by the financial aid The benefit received by the financial aid professional creates an professional creates an appearanceappearance that he or that he or she may not be impartial, and may not be she may not be impartial, and may not be acting solely in the best interests of the acting solely in the best interests of the students and parents he or she serves. students and parents he or she serves.

In our profession such an appearance can do In our profession such an appearance can do great harm, and it must be strictly avoided. great harm, and it must be strictly avoided.


The term The term “nominal value”“nominal value” leaves some room for leaves some room for interpretation. interpretation.

This is intentional: many states and institutions This is intentional: many states and institutions have laws and policies that regulate such have laws and policies that regulate such activities, and it is common for such laws and activities, and it is common for such laws and policies to define with specificity what is meant policies to define with specificity what is meant here by here by “nominal value.”“nominal value.”

As a general guide, and subject to more restrictive As a general guide, and subject to more restrictive

laws and policies, a total retail value of not more laws and policies, a total retail value of not more than $10 should be considered reasonable.than $10 should be considered reasonable.


The last component of this element of the The last component of this element of the Code Code deals with reimbursement for travel and expenses deals with reimbursement for travel and expenses incurred when serving on lender advisory boards incurred when serving on lender advisory boards or attending lender-sponsored training activities. or attending lender-sponsored training activities.

There is certainly value in providing lenders with There is certainly value in providing lenders with the unique expertise and perspective that only the unique expertise and perspective that only financial aid professionals can provide, but financial aid professionals can provide, but receiving any remuneration for such service, even receiving any remuneration for such service, even if only in the form of reimbursement for expenses, if only in the form of reimbursement for expenses, creates the creates the appearanceappearance of conflict that must be of conflict that must be avoided.avoided.


The same principle applies to reimbursement The same principle applies to reimbursement for lender-sponsored training activities. for lender-sponsored training activities.

Professional development is a key component Professional development is a key component of being an effective financial aid professional, of being an effective financial aid professional, and attending lender-sponsored training and attending lender-sponsored training programs can be a valuable way of obtaining programs can be a valuable way of obtaining the most current information.the most current information.


Again, however, receiving any remuneration Again, however, receiving any remuneration for such attendance from a source other for such attendance from a source other than his or her institution, even in the form than his or her institution, even in the form of reimbursement for expenses, creates the of reimbursement for expenses, creates the same impermissible same impermissible appearance appearance of conflict of conflict of interest, and must be avoided.of interest, and must be avoided.


6.6. ““Disclose to his or her institution in such a Disclose to his or her institution in such a manner as his or her institution may manner as his or her institution may prescribe any involvement with or interest prescribe any involvement with or interest in any entity involved in any aspect of in any entity involved in any aspect of financial aid.”financial aid.”

The same principal of transparency, or The same principal of transparency, or avoiding the avoiding the appearanceappearance of conflict of interest, of conflict of interest, drives this element of the code.drives this element of the code.


Every institution has a written policy on Every institution has a written policy on disclosure of potential conflicts of interest, and disclosure of potential conflicts of interest, and a process of determining whether an a process of determining whether an employee’s involvement creates an employee’s involvement creates an actual actual conflict of interest or the conflict of interest or the appearanceappearance of a of a conflict. conflict.

It is the obligation of the financial aid It is the obligation of the financial aid

professional to strictly abide by the professional to strictly abide by the requirements of his or her institution’s conflict requirements of his or her institution’s conflict of interest policy. of interest policy.

Changing LandscapeChanging Landscape

State Law – New York, New Jersey and State Law – New York, New Jersey and ConnecticutConnecticut

State AG Codes of Conduct – Texas, New State AG Codes of Conduct – Texas, New JerseyJersey

Federal LawFederal Law

U.S. Department of Education RegulationsU.S. Department of Education Regulations

Exhibitors and Advertisers Exhibitors and Advertisers GuidelinesGuidelines

Permissible involvement by Contributors, Permissible involvement by Contributors, Exhibitors, and Advertisers in NASFAA Exhibitors, and Advertisers in NASFAA

Annual ConferenceAnnual Conference While NASFAA’s policies were legal and fully While NASFAA’s policies were legal and fully

compatible with industry norms, the policy changes compatible with industry norms, the policy changes implemented reduced situations that might be viewed, implemented reduced situations that might be viewed, by some, as an by some, as an inducementinducement or a perceived or a perceived conflict conflict of interestof interest..

Advertising – agreements were honoredAdvertising – agreements were honoredExhibitors Exhibitors

- giveaways of nominal value (i.e. $ 10)- giveaways of nominal value (i.e. $ 10) - no prize drawings or scholarships- no prize drawings or scholarships

- eliminated named sponsorship of specific- eliminated named sponsorship of specific conference activities and eventsconference activities and events

Permissible InvolvementPermissible Involvementby Contributors, Exhibitors, and by Contributors, Exhibitors, and

Advertisers at the NASFAA Annual Advertisers at the NASFAA Annual ConferenceConference

Exhibitors Exhibitors - no social activities directed towards conference - no social activities directed towards conference

attendeesattendees - Business Solutions Seminars continued - Business Solutions Seminars continued

-Demonstration Rooms were not used for meal-Demonstration Rooms were not used for meal or reception purposesor reception purposes - Exhibitors could organize non social - Exhibitors could organize non social

(focus and advisory) groups(focus and advisory) groups - Non-alcoholic beverages and snacks - Non-alcoholic beverages and snacks

could be servedcould be served- NASFAA Scholarship Program was terminated- NASFAA Scholarship Program was terminated

An ExampleAn Exampleof a Collegeof a College

Code of EthicsCode of Ethics

Your CollegeYour CollegeCode of Ethics - ExampleCode of Ethics - Example

Code of Ethics for EmployeesCode of Ethics for Employees

Avoid conflicts of interests to guarantee all Avoid conflicts of interests to guarantee all full time employees shall devote their full time employees shall devote their primary responsibilities to their duties and primary responsibilities to their duties and obligations their institution.obligations their institution.


You should not undertake any employment, You should not undertake any employment, compensated or not, which is in conflict with the compensated or not, which is in conflict with the proper discharge of an employee’s duties, or proper discharge of an employee’s duties, or which might easily impair the objectivity or which might easily impair the objectivity or independence of the employee’s judgment in independence of the employee’s judgment in the exercise of duties to the institution.the exercise of duties to the institution.


You must not use your position or information You must not use your position or information you receive to secure financial gain, you receive to secure financial gain, unwarranted privileges, advantages or unwarranted privileges, advantages or employment for yourself.employment for yourself.

You must not use resources of your College or You must not use resources of your College or University (computers, programs, University (computers, programs, telecommunication equipment, offices, office telecommunication equipment, offices, office equipment, or supplies) for similar inappropriate equipment, or supplies) for similar inappropriate uses.uses.


No officer or employee shall knowingly act in a No officer or employee shall knowingly act in a way that might reasonably be expected to way that might reasonably be expected to create, among the public having knowledge of create, among the public having knowledge of their acts, an impression or suspicion that they their acts, an impression or suspicion that they may be engaged in conduct violating their trust may be engaged in conduct violating their trust as public officers or employees.as public officers or employees.


No full time employee shall engage in No full time employee shall engage in continuing outside employment that:continuing outside employment that:– constitutes a conflict of interestconstitutes a conflict of interest– occurs at a time when the employee is expected to occurs at a time when the employee is expected to

perform his or her duties, orperform his or her duties, or– diminishes the employee’s efficiency in performing diminishes the employee’s efficiency in performing

his or her primary work obligation.his or her primary work obligation.

Your CollegeYour CollegeCode of Ethics – Suggested Code of Ethics – Suggested

GuidelinesGuidelines Focus on your business practices andFocus on your business practices and

specific issuesspecific issues

Tailor it to fit your collegeTailor it to fit your college

Include employees in developing a codeInclude employees in developing a code

of ethicsof ethics

Train your people to be ethicalTrain your people to be ethical

Post your code of ethics internally, andPost your code of ethics internally, and

set up a reporting systemset up a reporting system

Your CollegeYour CollegeCode of Ethics – Suggested Code of Ethics – Suggested

GuidelinesGuidelines

Consider appointing a compliance personConsider appointing a compliance person

Follow up on any ethics violations you Follow up on any ethics violations you uncoveruncover

Live it from the top downLive it from the top down

Your State Code of Your State Code of ConductConduct

Texas Higher EducationTexas Higher EducationFair Lending PracticesFair Lending Practices

Prohibition against:Prohibition against:– solicitation or acceptance of gifts by an institution and solicitation or acceptance of gifts by an institution and

an institution’s employees;an institution’s employees;– revenue sharing with lenders;revenue sharing with lenders;– acceptance of remuneration by employee for service acceptance of remuneration by employee for service

on lender board;on lender board;– misleading identification of lender employees and misleading identification of lender employees and

representatives;representatives;– high risk student loan agreements;high risk student loan agreements;– directing potential borrowers to certain electronic loan directing potential borrowers to certain electronic loan

agreementsagreements– stock ownershipstock ownership


Disclosure of financing options required;Disclosure of financing options required;

Lender list requirements (if used)Lender list requirements (if used)– Lenders can not pay to be includedLenders can not pay to be included– Selection to list is objective and clearly Selection to list is objective and clearly

disclosed to prospective borrowersdisclosed to prospective borrowers– Inclusion & placement on list must be in best Inclusion & placement on list must be in best

interests of student borrowersinterests of student borrowers– Included lender must assure that benefits will Included lender must assure that benefits will

continue if loan is soldcontinue if loan is sold

– School must make reasonable inquiry & disclose School must make reasonable inquiry & disclose whether lender has an agreement to sell its loanswhether lender has an agreement to sell its loans

– School must make inquiry as to availability of zero-School must make inquiry as to availability of zero-interest loan providers and non-profit loan providersinterest loan providers and non-profit loan providers

– Favorable placement on list is prohibited if in Favorable placement on list is prohibited if in exchange for benefits to school or studentsexchange for benefits to school or students

– Lender prohibited from list if violated Texas Higher Lender prohibited from list if violated Texas Higher Education Fair Lending PracticesEducation Fair Lending Practices

Yearly trainingYearly training



Definition of a student loan lenderDefinition of a student loan lender– 11C of contract11C of contract

- Any industry, trade, or professional association or other - Any industry, trade, or professional association or other entity that receives money from any entity or association entity that receives money from any entity or association of entities describe by paragraph (A) or (B)of entities describe by paragraph (A) or (B)

– which is any person in the business of making, brokering, which is any person in the business of making, brokering, arranging, or accepting applications for student loans; or any arranging, or accepting applications for student loans; or any entity or association of entities that guarantees student loans, entity or association of entities that guarantees student loans, except TGSLCexcept TGSLC

The NASFAA The NASFAA Statement of Ethical Statement of Ethical PrinciplesPrinciples and and Code of ConductCode of Conduct are are available on the NASFAA web-site home available on the NASFAA web-site home page at:page at:

http://www.nasfaa.org/subhomes/MediaCenthttp://www.nasfaa.org/subhomes/MediaCenter/NASFAACodeofConduct.pdfer/NASFAACodeofConduct.pdf

nasfaa statement of ethical principles and code of conduct forinstitutional financial aid...

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ethical principlesadopted

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