New York Attorney General Andrew Cuomo issued a press release yesterday announcing an initiative in the legislature for a new bill named the Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007 which would "protect students and their families from exploitation by conflicts of interest in the student-loan industry." The bill is formally introduced by both of the leaders of the N.Y Legislature - Senate Majority Leader Joseph L. Bruno (R-Saratoga Springs) and Assembly Speaker Sheldon Silver (D-New York City). Silver, but not Bruno as we post this article, has issued a press release on the bill.
According to the press release, New York is the first state to offer legislation in direct response to Cuomo’s investigation into the student loan industry. The bill seeks to codify the College Loan Code of Conduct that has been used in settlement cases between Cuomo’s office and schools and lenders nationwide. Among other things, the College Loan Code of Conduct prohibits school/lender revenue sharing, gifts and/or trips paid by lenders to school administrators, compensation to school officials for serving on an advisory board, and mandates specific preferred lender list guidelines and disclosures.
According to the press release, the SLATE Act:
- "Prohibits lenders from making gifts - including the practice of revenue sharing - to colleges and universities or their employees in exchange for any advantage in loan activities
- Bans colleges and universities from soliciting, accepting or receiving any gifts whatsoever - including those construed as part of a revenue sharing practice - from lenders in exchange for advantageous loan consideration
- Bars college and university employees from receiving any advantage, reimbursement or benefit from serving as a member of a lender’s advisory board
- Prohibits lender employees and agents from posing as college or university employees, including staffing the school’s financial aid offices with lender employees
- Bans lenders and schools from agreeing to certain quid-pro-quo high-risk loans that prejudice other borrowers or potential borrowers
- Prohibits schools from linking or directing potential borrowers to any electronic master promissory notes or other loan agreements that do not allow students to enter a lender code or name for any lender offering the relevant loan at that guarantee agency"
Senator Kennedy, chairman of the Senate education legislation authorizing committee, released a statement in response to the NY legislation stating, "The United States Congress should follow suit by passing legislation that protects borrowers nationwide."
Senator Kennedy continued by promoting the Student Loan Sunshine Act which was introduced in February. "I will continue to pursue the Student Loan Sunshine Act - which protects all student borrowers by requiring transparency and prohibiting payments that create conflicts of interest," said Kennedy.
"As the Congress works to prevent future unethical practices in the student loan industry, we must extend these protections to students across the country, so they can be assured that their college financial aid offices are acting in their best interests," added Representative George Miller, chairman of the House Education and Labor Committee, in a press release yesterday.
Attorney General Cuomo is scheduled to testify before the House Education and Labor Committee on April 25 on the unethical practices and conflicts of interest that have recently been revealed within the student loan industry.
Other Media Stories on the SLATE Act
By Justin Draeger
NASFAA Assistant Director for Communications, and
Larry Zaglaniczny
NASFAA Director for Congressional Relations
Posted 04/17/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
