patricia reilly, tufts university christine mcguire, boston university bernard pekala, boston...
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Patricia Reilly, Tufts University
Christine McGuire, Boston University
Bernard Pekala, Boston College
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Patricia ReillyDirector of Financial Aid
Tufts University
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“Preferred Lender List”
Simplifies students’ process of selecting lenders
Guides students to the “best” lenders Gives schools leverage to negotiate the
“best” deals– For the student– For the institution– For both
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Everybody Everybody WinsWinsRightRight??
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Cuomo: School loan corruption widespread
Large student-loan firm settles with N.Y. AG
Sallie Mae to alter business practices, pay $2 million to education fund
Cuomo: States Will Pursue Student Loan Fiasco
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N.Y. Code of Conduct
Prohibition of certain remuneration to University employees or the University.
Limitations on University employees serving on Lender advisory boards.
Regulations on how preferred lender lists and can constructed and what need to be disclosed to families about the lists.
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Statement of Ethical Principles
And
Code of Conduct
For
Institutional
Financial Aid Professionals
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The primary goal of the institutional financial aid professional is to help students achieve their
educational potential by providing appropriate financial
resources.
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To accomplish this,
financial aid professionals
are expected to…
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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.
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NASFAA Code of Conduct
Refrain from taking any action for his or her personal benefit.
Refrain from taking any action he or she believes is contrary to law, regulation, or the best interests of the students and parents he or she serves.
Ensure that the information he or she provides is accurate, unbiased and does not reflect any preference arising from actual or potential personal gain.
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NASFAA Code of Conduct
Be objective in making decisions and advising his or her institution regarding relationships with any entity involved in any aspect of student financial aid.
Disclose to his or her institution in such manner as his or her institution may prescribe any involvement with or interest in any entity involved in any aspect of student financial aid.
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NASFAA Code of Conduct
Refrain from soliciting or accepting anything of other than nominal value from any entity involved in themaking, holding, consolidating or processing of any student loans
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All Things Considered, April 25, 2007
New York Attorney General Andrew Cuomo told lawmakers that if the federal
government doesn't step in to regulate the student loan industry, the states will.
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Student Lending Accountability, Transparency and Enforcement Act
(SLATE)
Mirrors codes of conduct embedded in agreements entered into between NY Attorney General, lenders and
institutions.
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Student loan probe pushes Congress to act
Lawmakers say Cuomo-endorsed rules should be applied nationwide
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Final Regulations(Federal Register, November 1, 2007)
Preferred Lender Lists must contain at least three unaffiliated lenders.
No lender who offers the institution any benefits may be on a Preferred Lender List
Must be reviewed and updated annually.
Lenders may not automatically be assigned through award packaging for first time borrowers.
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Final Regulations(Federal Register, November 1, 2007)
Institution must disclose – method and criteria for selecting lenders– Comparative information about interest
rates and other benefits offered by lenders
– That students are not required to use lenders on the list
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Final Regulations(Federal Register, November 1, 2007)
Lenders are prohibited from– Any philanthropic activities, in return for being
placed on a Preferred Lender List– Paying costs of aid administrators attending
conferences, or for entertainment at lender-sponsored events
– Conducting in person entrance or exit counseling– Soliciting a school employee to serve on an
advisory board or paying for costs associated with serving on an advisory board
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Final Regulations(Federal Register, November 1, 2007)
Lenders are permitted to– Offer in-person financial literacy outreach to
students.– Provide short term staffing on an
emergency, non-recurring basis.– Pay for meals, refreshments, and
receptions that are reasonable in cost if scheduled on conjunction with a training, meeting or conference open to all attendees.
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Boston UniversityBoston UniversityBoston UniversityBoston University
Christine McGuire
Executive Director
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What is the standard process forchange in the aid programs?
Proposed LegislationMust pass both houses of Congress and be
signed by the President to become law
Negotiated RulemakingNotice of Proposed Rulemaking (NPRM)Final Regulation is published
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February 8, 2006
President Bush signed the Higher Education Reconciliation Act of 2005 (the “HERA”), Pub. L. 109 171, which made significant changes to the Higher Education Act of
1965, as amended (the “HEA”), and reauthorized the Federal Family Education
Loan (FFEL) Program.
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Negotiated Rulemaking Required by the Department
The loans team began meeting in December.
Met 4 times for a total of approximately 12 days.
Finished in April without consensus on the whole package of regulations.
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Why consensus was difficult?
Negotiators represented sectors rather than specific organizations
Department of Education decided consensus was all or nothing
Political situation exploded in the middle of the negotiating
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Choice of lender in Direct Loans?
The U.S. Department of Education commented on this during negotiated rulemaking…
There are two federal guaranteed loan programs developed and maintained with distinctly different purposes.
The school chooses which program in which to participate.
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Press releases and media coverage have confused the current laws and regulations regarding Preferred Lender Lists.
Regulations now in place for FFELP lender lists have been broadly applied to private loans in the eyes of anyone from outside the aid office.
Impact of the Media Coverage
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Mapping the Landscape
Why have a Lender List?
Students and families want advice
Families and schools want to process funds
efficiently to ensure the bill is paid
Direct marketing can be confusing and sometimes
misleading
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Mapping the Landscape
Why not have a Lender List?
Reduce concern of real or perceived conflict of
interest
Reduce the schools responsibility to disclose
methods and criteria for selection
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What approach should schools be taking regardless of whether DL or
FFELP?Articulate clear policies regarding:
Institutional gift policyConflict of interest policyThe process for evaluating and
disclosing lenders or loans recommended, regardless of Federal or private credit
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Bernard PekalaDirector of Financial Aid Strategies
Boston College
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Campus Considerations
Decision Making: To BE or Not TO BE:
InformIncludeCommunicate
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Campus Considerations
Decision Making: To BE or Not TO BE: (cont.)
InformDecision MakersDecision Approvers
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Campus Considerations
Decision Making: To BE or Not TO BE: (cont.)
IncludeNeed-to-Know Interested Parties
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Campus Considerations
Decision Making: To BE or Not TO BE: (cont.)
CommunicateOften InclusiveFinalFollow-up
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Campus Considerations
Include??Internal
PresidentVice-Presidents/Deans (various
Executive, Financial, etc..)Departments (Financial Aid,
Bursar, Legal, Purchasing, etc..)DirectorsCoordinatorsStaff
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Campus Considerations
Include??
ExternalStudents/ParentsGuarantee AgenciesMASFAA/EASFAA/NASFAAConsultantsLenders
ProfitNon-Profit
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Campus Considerations
Options??
No listsPartial lists
UG OnlyGrad OnlyBy ProgramBy SchoolFFELPPrivate
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Campus Considerations
Options??
How many on the listList Types
Inclusive (All)VolumeBenefit
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Campus Considerations
Information Collection Options??
Request For ProposalsRequest For Information
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Boston College’s RFI
Four Parts
Cover Letter (optional)Actual RFIAnswer SheetAnalysis SheetsDisclosure Information
WebPrinted
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DISCUSSIONDISCUSSIONand and
QUESTIONSQUESTIONS
DISCUSSIONDISCUSSIONand and
QUESTIONSQUESTIONS