Transcript Slide 1

MASFAA Conference
Newton, MA
November 8, 2007
Patricia Reilly, Tufts University
Christine McGuire, Boston University
Bernard Pekala, Boston College
Tufts University
Patricia Reilly
Director of Financial Aid
“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
Everybody Wins
Right?
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
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.
Statement of Ethical Principles
And
Code of Conduct
For
Institutional
Financial Aid Professionals
The primary goal of the
institutional financial aid
professional is to help
students achieve their
educational potential by
providing appropriate financial
resources.
To accomplish this,
financial aid professionals
are expected to…
Commit to the highest level of
ethical behavior and refrain from
conflict of interest or the
perception thereof.
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.
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.
NASFAA Code of Conduct
 Refrain from soliciting or accepting
anything of other than nominal
value from any entity involved in the
making, holding, consolidating or
processing of any student loans
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.
Student Lending Accountability,
Transparency and Enforcement Act
(SLATE)
Mirrors codes of conduct embedded in
agreements entered into between
NY Attorney General, lenders and
institutions.
Student loan probe pushes Congress to act
Lawmakers say Cuomo-endorsed
rules should be applied nationwide
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.
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
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 lendersponsored 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
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.
Boston University
Christine McGuire
Executive Director
What is the standard process for
change in the aid programs?
Proposed Legislation
Must pass both houses of Congress and be
signed by the President to become law
Negotiated Rulemaking
Notice of Proposed Rulemaking (NPRM)
Final Regulation is published
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.
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.
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
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.
Impact of the Media Coverage
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.
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
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
What approach should schools be
taking regardless of whether DL or
FFELP?
Articulate clear policies regarding:
Institutional gift policy
Conflict of interest policy
The process for evaluating and
disclosing lenders or loans
recommended, regardless of
Federal or private credit
Boston College
Bernard Pekala
Director of Financial Aid Strategies
Campus Considerations
Decision Making: To BE or
Not TO BE:
Inform
Include
Communicate
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Inform
 Decision Makers
 Decision Approvers
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Include
 Need-to-Know
 Interested Parties
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Communicate
 Often
 Inclusive
 Final
 Follow-up
Campus Considerations
Include??
Internal
 President
 Vice-Presidents/Deans (various
Executive, Financial, etc..)
 Departments (Financial Aid,
Bursar, Legal, Purchasing, etc..)
 Directors
 Coordinators
 Staff
Campus Considerations
Include??
External
 Students/Parents
 Guarantee Agencies
 MASFAA/EASFAA/NASFAA
 Consultants
 Lenders
Profit
Non-Profit
Campus Considerations
Options??
No lists
Partial lists
 UG Only
 Grad Only
 By Program
 By School
 FFELP
 Private
Campus Considerations
Options??
How many on the list
List Types
 Inclusive (All)
 Volume
 Benefit
Campus Considerations
Information Collection Options??
Request For Proposals
Request For Information
Boston College’s RFI
Four Parts
Cover Letter (optional)
Actual RFI
Answer Sheet
Analysis Sheets
Disclosure Information
 Web
 Printed
DISCUSSION
and
QUESTIONS