Attorney General Bill McCollum News Release
December 5, 2007
Media Contact: Jenn Meale
Phone: (850) 245-0150
Attorney General McCollum Unveils Proposed Code of Conduct for Student Lending at Public Universities
~ Code will be presented to Board of Governors at upcoming meeting for approval ~
TALLAHASSEE, FL - Attorney General Bill McCollum today unveiled a proposed Code of Conduct to protect Florida students from potentially unfair practices when they are applying for educational loans. The Code of Conduct will be presented to the Florida Board of Governors for its consideration at the Board’s meeting being held today and tomorrow at the University of Central Florida and, if approved, would be implemented at all of Florida’s public universities. The Code is also being reviewed by Florida's community college presidents for implementation or adoption as part of their internal institutional policies.
“Our educational institutions must protect the best interests of the student when giving out financial guidance. The Florida code goes a long way toward ensuring this, and I appreciate the cooperative efforts of everyone who has worked to protect those interests,” said Florida Attorney General Bill McCollum. “Students and parents need full disclosure of all their loan options in order to make the best financial decisions for their education.”
The Florida Code was developed in cooperation with staff from the Board of Governors and the Florida Department of Education as well as representatives from Florida’s public universities and community colleges. Initial development began in May after Attorney General McCollum received information regarding allegations of unfair practices in the student lending industry. Seeking to protect Florida students from similar practices, Attorney General McCollum’s Economic Crimes Division sought and obtained information about student loan processes at Florida’s 11 public universities, 28 community colleges and several private universities.
While no significant conflicts of interest were uncovered by the Attorney General’s Office during its review of the public universities, Florida’s investigation into several private institutions is still underway. Similar investigations by state Attorneys General across the nation have uncovered conflicts of interest and deceptive practices in the $85 billion college loan industry including gifts, trips and even stock in lender companies directly given to financial aid officials by lenders. The Florida Code was created to address these and other questionable practices in the student loan industry and to ensure that students and parents are protected from conflicts of interest that might motivate schools to steer students to a particular – and possibly more expensive – lender. Any resolution of the Attorney General’s outstanding investigations of private institutions in Florida will more than likely include a requirement that the institution adopt Florida’s Code.
The Code includes the following provisions:
- The Code prohibits university employees from receiving any personal benefit from student loan providers. Cash, stocks, gifts, entertainment and expense paid trips may never be accepted from a lending institution. Likewise, an individual may not accept payment for lodging, meals or travel to conferences from a lending institution.
- The Code provides that university financial aid employees may not be paid to serve on lender advisory boards.
- A university may not accept anything from a lending institution in exchange for any advantage provided to that lending institution.
- The university shall not allow lenders to staff the university’s financial aid office or allow lenders to create the impression that the lender’s employees are employees of the university.
- The university must explain the criteria used for selecting preferred lenders.
Under the new Code, a university that decides to use a preferred lender list will be required to make extensive disclosures to the borrower, including where to find information on other lending institutions or interest rates and where to find information on any agreements by “preferred lenders” to sell their loans to other entities. The university must also disclose that it will promptly certify loans from any other lender selected by the borrower.
Nationwide, two-thirds of all college graduates leave school with student loans. A copy of the proposed Florida Code is available here.