Committee on Education and Labor : U.S. House of Representatives

Press Releases

House Passes Bipartisan Legislation to End Unethical Practices in Student Loan Industry
Student Loan Sunshine Act Would Clean up Relationships Between Lenders and Colleges

Wednesday, May 9, 2007

 

WASHINGTON, DC -- With evidence mounting of conflicts of interest and other unethical practices in the student loan industry, lawmakers praised the House's overwhelming approval today of bipartisan legislation that would clean up the relationships between student lenders and colleges. The House passed the bill, the Student Loan Sunshine Act, by a vote of 414-3.

"Families are already paying too much to send their kids to college, so the idea that lenders would enhance their profits - at the expense of students and families - by offering gifts or other inducements to college officials or engaging in other unethical behavior is especially abhorrent," said Miller, chairman of the Education and Labor Committee. "This legislation would put a stop to those practices and make sure that the student loan programs operate on the level, in the best interests of students and families trying to pay for college."

"In order to begin reaffirming trust in our nation's student aid system, all stakeholders must step up, and with this bipartisan bill, the House is stepping up in a big way," said McKeon, senior Republican on the Education and Labor Committee.  "The FFEL and other financial aid programs successfully serve millions of students and their families every year, and this bill makes our system even better.  Simply put, this bipartisan effort isn?t about us versus the lenders or us versus the institutions.  It's about protecting the interests of millions of young men and women who expect our student aid system to be there for them when they need it."

"The daily drumbeat of scandal in the student loan industry cries out for action," said Hinojosa, chairman of the Subcommittee on Higher Education, Lifelong Learning, and Competitiveness. "With the Sunshine Act, we are taking a critical first step towards restoring public confidence in the integrity of our student loan programs."

Investigations at the federal and state level and by news organizations over the last several months have highlighted a number of unethical practices in the student loan industry, such as lenders offering gifts or other inducements to college financial aid offices in exchange for higher loan volume. The Student Loan Sunshine Act would prevent these practices in the future by taking the following steps, among others:

  • Requiring institutions and lenders to adopt strict codes of conduct that adhere to specific guidelines;
  • Banning all gifts, participation on advisory boards, and revenue-sharing agreements between lenders and schools;
  • Requiring institutions to disclose all relationships with lenders;
  • Only allowing "preferred lender lists" on campuses with strict assurances that the list was created with the students' best interest in mind;
  • Ensuring that students have access to all lenders of their choice, including those not on the preferred lender lists;
  • Banning staffing of school financial aid offices by lenders;
  • Giving students full and fair information when taking out and repaying loans;
  • Protecting students from aggressive marketing practices; and
  • Providing students information on all federal student aid opportunities through a new "one-stop" link on the Department of Education website.

###


FOR IMMEDIATE RELEASE
Contact: Tom Kiley / Rachel Racusen
2181 Rayburn House Office Building
Washington, DC 20515
202-226-0853