Department Of Education Busts Student Loan Party Once And For All

By consumeristcarey June 2, 2007

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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    Comments

    1. TechnoDestructo says:
      June 2, 2007 at 5:19 pm

      “If a loan company violates any of the rules, the federal government will no longer guarantee their loans. “


      Oooohhh…keep a sharp eye, out, people. Prove your loan company is in violation, and you’ve got them over the barrel. No more of that trying to make sure people default then fucking them for decades crap.

    2. capstinence says:
      June 2, 2007 at 5:43 pm

      Does this apply retroactively? I went to USC (just graduated last year). :)

    3. gamble says:
      June 2, 2007 at 6:10 pm

      I don’t have anything very material to say about this loan situation, but…that’s a sweet picture

    4. amalgamator says:
      June 2, 2007 at 7:43 pm

      What about financial aid officers owning stock in a loan company or serving on it’s board? I believe that there were cases of this reported.

    5. Harvey Birdman says:
      June 2, 2007 at 7:55 pm

      @amalgamator: I think some of the state attorney general agreements have dealt with that issue. There’s a lot of cooks in the kitchen.

    6. Jasmo says:
      June 2, 2007 at 11:10 pm

      I guess in a perfect world, we wouldn’t need to pass laws to ensure, you know, the bare minimum of honesty and fairness and stuff.

    7. Bourque77 says:
      June 3, 2007 at 3:27 am

      Why oh why wasnt this in place to begin with? They are loan institutions just nicer loan sharks come on you cant trust em. Nor the financial advisors at schools apparently.

    8. jeffj-nj says:
      June 4, 2007 at 2:16 pm

      “on the straight and narrow”, huh? That’s what I’ve been mis-hearing for years? I always thought it was “on the straightened arrow”. Now that I see I’ve been wrong all this time, I gotta tell ya, I still don’t understand either.

    9. pestie says:
      June 4, 2007 at 4:13 pm

      @jeffj-nj: “Straightened arrow? Heh… That’s right up there with “all intensive purposes” from a couple weeks ago. For the record, I believe “on the straight and narrow” implies a metaphorical straight and narrow path.