Lawfuel – the Law Newswire – TALLAHASSEE, FL – Florida Attorney General Bill McCollum and New York Attorney General Andrew M. Cuomo joined 30 Attorneys General in urging the U.S. Senate to enact the Student Loan Sunshine Act, a new federal law to safeguard students and families nationwide from deceptive practices in the college loan industry. The House of Representatives recently passed this legislation with a vote of 414-3.
In a bipartisan letter to U.S. Senate Majority Leader Harry Reid, and
Senate Minority Leader Mitch McConnell, Senator Edward M. Kennedy, chairman of the Senate Education Committee and Senator Michael B. Enzi, the ranking member of the Committee; the Attorneys General requested that the Senate pass The Student Loan Sunshine Act without delay. Starting tomorrow, the Senate Education Committee will begin considering the Higher Education Amendments of 2007, at which time the Sunshine Act is expected to be offered.
“The integrity of our higher education system should not be for
sale,” said Florida Attorney General Bill McCollum. “Students need full
disclosure of all their loan options in order to make the best financial
decisions for their education. Our educational institutions must protect
the best interests of the student when giving out financial guidance. This
legislation goes a long way towards ensuring this.”
Similar legislation was recently enacted in New York to ban the
deceptive practices exposed as a result of Cuomo’s ongoing investigation
into the widespread conflicts of interest throughout the $85
billion-per-year student loan industry.
“The crisis in the college loan industry calls for a national
solution,” said Attorney General Cuomo. “We need vision and leadership over ideology and partisanship. We need a federal law that will enhance the states’ investigations of improper and illegal activities in the college loan industry. New York has already outlawed such illegal activities but college bound students across the country deserve similar rights and protections.”
The Florida Attorney General’s office began investigating the student
loan process in May after receiving information from the New York Attorney General’s Office. Letters requesting information about student loan processes were sent to Florida’s 11 public universities, 28 community colleges and seven private universities. Florida’s investigation is still in the review stage, but the development of a code of conduct is likely.
Cuomo’s investigation, launched in February 2007, uncovered illegal
steering to preferred lenders by specific schools and revenue sharing
agreements between schools and lenders. Investigations conducted by other
state Attorneys General across the nation have uncovered similar conflicts of interest and deceptive practices in the college loan industry including gifts, trips and even stock in lender companies directly given to financial aid officials by lenders. Nationwide, two-thirds of all college graduates leave school with student loans and the college loan industry has become an $85 billion per year business.
The new federal law will require schools to adopt a Code of Conduct,
which is the basis for Cuomo’s settlements with the nation’s top lenders
and dozens of schools across the country. Additionally, the law will work
to accomplish the following initiatives:
– Ban revenue sharing between schools and lenders, bar gifts from
lenders, outlaw participation in advisory boards of lenders and staffing of
school financial aid offices by lenders;
– Require that “Preferred Lender Lists” be created only with the
student’s best interest in mind – a requirement that the New York Attorney
General and other state Attorneys General have included in settlements with
schools, and a requirement of New York’s legislation – The Student Lending
Accountability, Transparency and Enforcement (SLATE) Act of 2007;
– Ensure access to the student’s lender of choice, whether or not the
lender is on a Preferred Lender List;
– Guarantee oversight of lenders offering private loans and require
that schools disclose federal loan options before students take out private loans, and
– Compel lenders and institutions to fully disclose terms, conditions
and incentives (e.g., philanthropic contributions) for all loans.
“Many of us have served in both Federal and State Government, and we
respect the role of each. We are well aware of the power and responsibility
of the Federal Government to resolve national issues with uniformity and
consistency. This problem cries out for a federal solution that supplements the work of state Attorney General offices across the country,” said the Attorneys General in the multistate letter.
In addition to McCollum and Cuomo, the Attorneys General from the
following states have signed on to the letter: Arizona, Arkansas,
California, Colorado, Connecticut, Delaware, District of Columbia, Iowa,
Illinois, Hawaii, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Virginia, Washington, West Virginia and Wyoming.
A copy of the letter is available online at:
http://myfloridalegal.com/webfiles.nsf/WF/MRAY-74BM2E/$file/Letter_to_Senate.pdf
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