UC to review loan providers
By Gregor Hunter
April 12, 2007 9:47 p.m.
The University of California has begun a complete review of its relations with student loan providers and may adopt a code of conduct to regulate dealings with lenders, according to university officials.
The move comes after a continuing probe by the attorney general of New York revealed payments of cash gifts and stock by loan lenders in exchange for university recommendation to students.
Earlier this week, a senior Education Department official and financial aid officers at six universities were found to have received improper transfers of stock in lender companies.
Though UCLA has not been accused of creating a conflict of interest and is not being investigated, university officials said the review of UC policy was a reaction to conflicts of interest exposed elsewhere.
“We have received no inquiries, nor do we expect to. We expect our staff to abide by the highest standards. We continually review our preferred lenders, making sure they are all providing exceptional service and competitive rates to our students,” said Ricardo Vazquez, spokesman for the UC Office of the President.
The Association of American Universities is also considering adopting the College Code of Conduct. As UCLA is one of the association’s members, officials intend to participate in these discussions.
The College Code of Conduct was created by New York Attorney General Andrew Cuomo in reaction to conflicts of interest in the student loan market, and has been adopted by 36 colleges and two major lenders: Sallie Mae and CitiBank.
The guidelines would prohibit university officials from accepting any gifts, trips or appointments by lenders, and require schools to fully disclose the reasons for recommending particular student loan providers.
UCLA officials have reaffirmed that the school is not being investigated for conflict of interest, nor has it been offered any payment to give lenders preferential treatment.
“It would be inconsistent with our ethics,” said UCLA spokesman Lawrence Lokman.
The university reviews all providers and selects student loans which provide Bruin borrowers with extended benefits beyond industry standards in the student loan market, according to the UCLA financial aid Web site.
The Web site also states that the criteria for recommendation favors companies that provide online and paper-free application forms for greater processing speed, and those which cooperate with the Financial Aid Office and Sallie Mae’s on-campus loan processing offices for localized customer service.
But others still reiterated concerns and stressed the need to remove the potential for abuse from the student loan market.
“We need to make sure that current and future students are protected from unfair loan practices, whether or not conflict of interest is involved,” said Gregory Cendana, the internal vice president of the Undergraduate Students Association Council.
He added that, given the number of students relying on financial aid, the College Code of Conduct provided important regulations on the loan market.
“It’s something that we should be keeping an eye on, especially because it’s an $85 million industry and many students are graduating with loan debt. I’m worried that many lenders are gleaning financial rewards off the backs of students.”
These loans, however, are often necessary to students from lower-income backgrounds.
Jessica Rouzer, a second-year psychology student who currently takes out a loan with Bank of America, said she could not study at UCLA without it. “I wasn’t really thrilled to have to take out a loan. I knew I needed that much because otherwise I wouldn’t be able to pay for my education,” Rouzer said.
She said it is difficult for students to pay attention to their student loans, so they rely on financial aid offices.
“I would be a little disappointed if UCLA was accepting gifts to give preferential treatment,” Rouzer said.
