Department of Education sets new loan policies
In an effort to increase accountability and transparency within the college financial aid industry, the U.S. Department of Education has released new regulations that reflect major policy changes regarding preferred lender lists and potential conflicts of interest between university officials and loan companies.
The student loan industry came under fire earlier this year by New York State Attorney General Andrew Cuomo, whose investigations revealed that Hopkins's own Director of Student Financial Services, Ellen Frishberg, had accepted at least $65,000 in consulting and tuition payments from a loan company that was on the school's recommended lenders list. Hopkins immediately suspended all lists of recommended lenders in the wake of Cuomo's investigation.
The Department of Education claims that these new regulations will prove to be a step toward creating greater transparency of student loan programs, ensuring free choices for borrowers and restoring confidence in financial aid services and programs.
According to Bill Conley, interim director of Student Financial Services, the controversy surrounding the preferred lenders list is still prevalent at Hopkins. Although they previously told the News-Letter that instituting a new preferred lenders list would merely require a national consensus on regulations, the University now says that it will remain without an official list for the foreseeable future.
"In the current climate, the appearance of a conflict of interest is present," Conley said.
The "shadow" of the Cuomo investigation is still falling on the financial aid office, according to Conley, so the office is determined to prove that they are not "in the pockets" of big lending companies and can still provide fair and beneficial options to students.
The new national mandates, which go into effect next July, do not prohibit preferred lenders lists, but require universities to include no fewer than three lenders on any such list. They must also provide full disclosure of the criteria used for placing them on the list, and schools are explicitly forbidden from including companies that have offered them financial incentives for their inclusion.
The student loan industry came under fire earlier this year by New York State Attorney General Andrew Cuomo, whose investigations revealed that Hopkins's own Director of Student Financial Services, Ellen Frishberg, had accepted at least $65,000 in consulting and tuition payments from a loan company that was on the school's recommended lenders list. Hopkins immediately suspended all lists of recommended lenders in the wake of Cuomo's investigation.
The Department of Education claims that these new regulations will prove to be a step toward creating greater transparency of student loan programs, ensuring free choices for borrowers and restoring confidence in financial aid services and programs.
According to Bill Conley, interim director of Student Financial Services, the controversy surrounding the preferred lenders list is still prevalent at Hopkins. Although they previously told the News-Letter that instituting a new preferred lenders list would merely require a national consensus on regulations, the University now says that it will remain without an official list for the foreseeable future.
"In the current climate, the appearance of a conflict of interest is present," Conley said.
The "shadow" of the Cuomo investigation is still falling on the financial aid office, according to Conley, so the office is determined to prove that they are not "in the pockets" of big lending companies and can still provide fair and beneficial options to students.
The new national mandates, which go into effect next July, do not prohibit preferred lenders lists, but require universities to include no fewer than three lenders on any such list. They must also provide full disclosure of the criteria used for placing them on the list, and schools are explicitly forbidden from including companies that have offered them financial incentives for their inclusion.
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