USM Board of Regents Adopts College Loan "Code of Conduct"

ADELPHI, Md. (June 22, 2007) - The University System of Maryland (USM) Board of Regents unanimously approved a new college loan "Code of Conduct" during its annual meeting today at the University of Maryland, College Park. Drafted by Maryland Attorney General Douglas Gansler in consultation with students and leaders in Maryland higher education, the "Code of Conduct" will help to ensure integrity and transparency in the operations of the system's financial aid offices.

"I am very pleased that the board has adopted this code for USM," said Chancellor William E. Kirwan. "Financing a college education can be a daunting and confusing experience for students and their families. They deserve the most fair, reliable, and objective information and counsel about student loans that is possible. This code will help ensure that."

The college loan "Code of Conduct" is part of a nationwide effort to improve the integrity of the student loan process. The lending industry has been scrutinized by Senate and House committees, and New York State Attorney General Andrew Cuomo has investigated and entered into settlements with several universities and lenders accused of unethical practices and conflicts-of-interest.

To date, no irregularities in USM institutions' lender relationships have been found.

Among the items covered by the Attorney General's seven-point "Code of Conduct" are restrictions on revenue sharing and accepting gifts and trips from lending institutions; criteria and disclosure requirements for preferred lender lists; and restrictions on the practices of lender call-centers.

The following is the complete text of the Attorney General's college loan "Code of Conduct" adopted by USM (also available as a PDF File):

1. Revenue Sharing Restrictions

Colleges may not receive anything of value from any lending institution in exchange for any advantage sought by the lending institution. Lenders cannot pay to get on a school's preferred lender list.

2. Gift and Trip Restrictions

College employees may not take anything, including trips, of more than nominal value from any lending institution, when such things are offered in connection with the employees' financial aid work.

3. Advisory Board Compensation Rules

College employees with responsibility for financial aid work may not receive anything of value for serving on the advisory board of any lending institution.

4. Preferred Lender Guidelines

College preferred lender lists must be based solely on the best interests of the students who may use the list without regard to financial interests of the college.

5. Preferred Lender Disclosure

On all preferred lender lists the college must clearly and fully disclose the criteria and process used to select preferred lenders. Students must also be told that they have the right and ability to select the lender of their choice regardless of the preferred lender list.

6. Loan Resale Disclosure

Colleges may not permit a lender to appear on a preferred lender list unless the lender agrees to disclose to the student at the time of the loan any pre-existing agreement to sell the loan to another lender.

7. Call-Center Restrictions

Colleges may not permit employees or agents of lenders to identify themselves to students as employees of the colleges. No employee or agent of a lender may be employed by a college financial aid office.


Contact: John Buettner
Phone: 301.445.2719