Yesterday New York Governor Eliot Spitzer signed the Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007, which was passed unanimously earlier this month by the New York legislature at the request of New York Attorney General Andrew Cuomo. This is the first state legislation that has been signed into law to "protect students and their families from abuses and conflicts of interest in the student loan industry," according to a statement released by Spitzer.
The SLATE Act closely mirrors the code of conduct that 24 schools and five lenders have already agreed to abide by in response to the attorney general’s recent investigations into the relationships between financial aid administrators and student loan providers.
"This legislation provides important protections to New York students and their families, too many of whom have been taken advantage of and cheated while in pursuit of quality higher education," said Spitzer, who went on to thank Cuomo for his "tireless investigation."
Spitzer called on the U.S. Senate to take immediate action on the Student Loan Sunshine Act to get it "to the President’s desk as soon as possible."
In a separate press release, the New York attorney general also called on the national legislature to take quick action on the Sunshine Act, by using New York State as an example of creating "better protections for working and middle class families struggling to pay for college."
Of particular concern to student aid administrators is a provision that would ban college and university employees from receiving any reimbursement for serving as a member of a lender’s advisory board. Under definitions in the SLATE Act, NASFAA could be designated as a "lender" because lenders make up a portion of the NASFAA membership. As a result, members serving on the NASFAA Board of Directors or NASFAA committees would not be able to accept any reimbursement for expenses related to serving on those boards.
While the New York attorney general’s office is aware that their code and the SLATE Act would prohibit schools from receiving reimbursement for these volunteer activities, they have indicated a willingness to consider modifying these provisions during the regulatory process. NASFAA is continuing to work with the attorney general’s office on these issues and will keep members informed of progress as it develops.
According to Spitzer’s press release, the SLATE Act includes the following provisions:
- 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; and,
- Dictates strict criteria that schools must abide by if they continue to use "preferred lender" practices.
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 05/31/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
