Department Of Education Busts Student Loan Party Once And For All

6.2.07 4:52 PM EDT By consumeristcarey

The Department of Education has issued new rules to keep financial aid officers on the straight and narrow. The rules were issued after students, loan companies, and colleges failed to agree on a compromise measure. The rules will ban several practices:

  • Colleges will be required to recommend at least three preferred loan companies to students;
  • Colleges will need to explain how and why they chose their preferred lenders;
  • Colleges can no longer accept computers or reimbursement for printed materials from loan companies at less than market rate;
  • Loan companies would be banned from giving gifts or cash to financial aid officers;
  • Loan companies cannot contribute to school-affiliated groups, like alumni associations.

    The proposed rules only apply to federally guaranteed student loans. If a loan company violates any of the rules, the federal government will no longer guarantee their loans. If approved, the rules will take affect next summer. — CAREY GREENBERG-BERGER

    U.S. Puts Limits on Lenders’ Ties to Universities [NYT]
    (Photo: Rob Lee)

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