Ask Mr. Ethics: Can I Offer My Personal Experience with Certain Lenders To Borrowers?

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Question

Dear Mr. Ethics,

I work in the financial aid office of large public four-year university. Back when I was paying off my own student loans, I had a frustrating experience with a particular private student loan provider. That company is not on my institution’s preferred lender list, but students still sometimes select it. Can I recommend my students choose a different option when I’m counseling them about borrowing?

Sincerely,

I Know From Experience

Answer

Dear IKFE:

NASFAA's Code of Conduct states that "A borrower's choice of a lender will not be denied, impeded, or unnecessarily delayed by the institution, even if that lender is not included on the institution's preferred lender list.” It also mandates that “Information provided by the financial aid office is accurate, unbiased, and does not reflect preference arising from actual or potential personal gain.” Though you wouldn’t be gaining anything on a personal level by dissuading students from using a certain lender (except maybe some karmic payback for prior frustrations!), it’s best to avoid referencing your own experience when talking with students. You can suggest students consider lenders on your institution’s recommended list--which of course would have been constructed using unbiased objective criteria--but you should not redirect students from a lender if that is their selection. Take solace in the fact that you are already helping students by arming them with a wealth of unbiased information and being available when they need your assistance. 

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Publication Date: 4/24/2015


Lynn S | 4/24/2015 11:8:21 AM

I come across a similar issue all the time in my role of working with alumni to help figure out their most appropriate loan repayment options. Borrowers with multiple servicers often consolidate right after their grace period expires - i.e. when they've had little or no contact with their servicer and have no real information on which to base the irreversible decision of which servicer receives their loans. Understandably, I am constantly asked which servicer(s) I would recommend.
The way I see it, providing information that is "accurate, unbiased, and does not reflect preference arising from actual or potential personal gain" means that we should be having **honest** conversations with borrowers. And that means acknowledging that some companies do have chronic challenges and questionable policies that consistently result in poor service. I take every opportunity possible to ask our alumni about their experiences, good and bad. That way, any advice I give is based on the feedback of hundreds instead of just my own opinions.

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