1. The Changing Landscape Preferred Lender Lists
of Loans:
Preferred Lender Lists
MASFAA Conference
Newton, MA
November 8, 2007
Patricia Reilly, Tufts University
Christine McGuire, Boston University
Bernard Pekala, Boston College

2. Tufts University
Patricia Reilly
Director of Financial Aid

3. “Preferred Lender List”
Simplifies students’ process of selecting lenders
Guides students to the “best” lenders
Gives schools leverage to negotiate the “best” deals
For the student
For the institution
For both

4. Everybody Wins
Right?

5. Large student-loan firm settles with N.Y. AG
Cuomo: School loan corruption widespread
Large student-loan firm settles with N.Y. AG
Sallie Mae to alter business practices,
pay $2 million to education fund
Cuomo: States Will Pursue Student Loan Fiasco

6. N.Y. Code of Conduct
Prohibition of certain remuneration to University employees or the University.
Limitations on University employees serving on Lender advisory boards.
Regulations on how preferred lender lists and can constructed and what need to be disclosed to families about the lists.

7. Statement of Ethical Principles Financial Aid Professionals
And
Code of Conduct
For
Institutional
Financial Aid Professionals

8. The primary goal of the institutional financial aid professional is to help students achieve their educational potential by providing appropriate financial resources.

9. financial aid professionals
To accomplish this,
financial aid professionals
are expected to…

10. Commit to the highest level of ethical behavior and refrain from conflict of interest or the perception thereof.

11. NASFAA Code of Conduct
Refrain from taking any action for his or her personal benefit.
Refrain from taking any action he or she believes is contrary to law, regulation, or the best interests of the students and parents he or she serves.
Ensure that the information he or she provides is accurate, unbiased and does not reflect any preference arising from actual or potential personal gain.

12. NASFAA Code of Conduct
Be objective in making decisions and advising his or her institution regarding relationships with any entity involved in any aspect of student financial aid.
Disclose to his or her institution in such manner as his or her institution may prescribe any involvement with or interest in any entity involved in any aspect of student financial aid.

13. NASFAA Code of Conduct
Refrain from soliciting or accepting anything of other than nominal value from any entity involved in the making, holding, consolidating or processing of any student loans

14. All Things Considered, April 25, 2007
New York Attorney General Andrew Cuomo
told lawmakers that if the federal government
doesn't step in to regulate the student loan
industry, the states will.

15. Student Lending Accountability, Transparency and Enforcement Act (SLATE)
Mirrors codes of conduct embedded in agreements entered into between NY Attorney General, lenders and institutions.

16. Student loan probe pushes Congress to act
Lawmakers say Cuomo-endorsed
rules should be applied nationwide

17. Final Regulations (Federal Register, November 1, 2007)
Preferred Lender Lists must contain at least three unaffiliated lenders.
No lender who offers the institution any benefits may be on a Preferred Lender List
Must be reviewed and updated annually.
Lenders may not automatically be assigned through award packaging for first time borrowers.

18. Final Regulations (Federal Register, November 1, 2007)
Institution must disclose
method and criteria for selecting lenders
Comparative information about interest rates and other benefits offered by lenders
That students are not required to use lenders on the list

19. Final Regulations (Federal Register, November 1, 2007)
Lenders are prohibited from
Any philanthropic activities, in return for being placed on a Preferred Lender List
Paying costs of aid administrators attending conferences, or for entertainment at lender-sponsored events
Conducting in person entrance or exit counseling
Soliciting a school employee to serve on an advisory board or paying for costs associated with serving on an advisory board

20. Final Regulations (Federal Register, November 1, 2007)
Lenders are permitted to
Offer in-person financial literacy outreach to students.
Provide short term staffing on an emergency, non-recurring basis.
Pay for meals, refreshments, and receptions that are reasonable in cost if scheduled on conjunction with a training, meeting or conference open to all attendees.

21. Boston University
Christine McGuire
Executive Director

22. What is the standard process for change in the aid programs?
Proposed Legislation
Must pass both houses of Congress and be signed by the President to become law
Negotiated Rulemaking
Notice of Proposed Rulemaking (NPRM)
Final Regulation is published

23. February 8, 2006
President Bush signed the Higher Education Reconciliation Act of 2005 (the “HERA”),
Pub. L , which made significant changes to the Higher Education Act of 1965, as amended (the “HEA”), and reauthorized the Federal Family Education Loan (FFEL) Program.

24. Negotiated Rulemaking Required by the Department
The loans team began meeting in December.
Met 4 times for a total of approximately 12 days.
Finished in April without consensus on the whole package of regulations.

25. Why consensus was difficult?
Negotiators represented sectors rather than specific organizations
Department of Education decided consensus was all or nothing
Political situation exploded in the middle of the negotiating

26. Choice of lender in Direct Loans?
The U.S. Department of Education commented on this during negotiated rulemaking…
There are two federal guaranteed loan programs developed and maintained with distinctly different purposes.
The school chooses which program in which to participate.

27. Impact of the Media Coverage
Press releases and media coverage have confused the current laws and regulations regarding Preferred Lender Lists.
Regulations now in place for FFELP lender lists have been broadly applied to private loans in the eyes of anyone from outside the aid office.

28. Mapping the Landscape Why have a Lender List?
Students and families want advice
Families and schools want to process funds efficiently to ensure the bill is paid
Direct marketing can be confusing and sometimes misleading

29. Mapping the Landscape Why not have a Lender List?
Reduce concern of real or perceived conflict of interest
Reduce the schools responsibility to disclose methods and criteria for selection

30. Articulate clear policies regarding:
What approach should schools be taking regardless of whether DL or FFELP?
Articulate clear policies regarding:
Institutional gift policy
Conflict of interest policy
The process for evaluating and disclosing lenders or loans recommended, regardless of Federal or private credit

31. Boston College
Bernard Pekala
Director of Financial Aid Strategies

32. Decision Making: To BE or
Campus Considerations
Decision Making: To BE or
Not TO BE:
Inform
Include
Communicate

33. Decision Making: To BE or
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Inform
Decision Makers
Decision Approvers

34. Decision Making: To BE or
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Include
Need-to-Know
Interested Parties

35. Decision Making: To BE or
Campus Considerations
Decision Making: To BE or
Not TO BE: (cont.)
Communicate
Often
Inclusive
Final
Follow-up

36. Campus Considerations
Include??
Internal
President
Vice-Presidents/Deans (various Executive, Financial, etc..)
Departments (Financial Aid, Bursar, Legal, Purchasing, etc..)
Directors
Coordinators
Staff

37. Campus Considerations
Include??
External
Students/Parents
Guarantee Agencies
MASFAA/EASFAA/NASFAA
Consultants
Lenders
Profit
Non-Profit

38. Campus Considerations
Options??
No lists
Partial lists
UG Only
Grad Only
By Program
By School
FFELP
Private

39. Campus Considerations
Options??
How many on the list
List Types
Inclusive (All)
Volume
Benefit

40. Information Collection Options??
Campus Considerations
Information Collection Options??
Request For Proposals
Request For Information

41. Welcome,
Thanks for coming to Tools and Technology for Paperless Services. I am Chris Cordella, Director of Operations and Student Accounts at BC. My partner is Greg Keswick who was the Project Leader for this assignment. We are very excited to be here to show you some new innovations we have been part of at BC. What Greg and I will take you on is a tour of a product that was developed from scratch at BC. I would like to point out that while we will be demonstrating the product we have developed we want to stress that is is not a sales pitch rather we will be using the product to demonstrate technology and work flow tools that could be used in any product development. If you should wish further information about the product I will leave a signup sheet at the front of the auditorium where you can leave your name, phone and and we can get more information to you. Today’s presentation will explore the problems we were trying to solve, the goals of the project, some sample screens the benefits we have achieved and at the end we leave some time for a live demo and your questions and answers. With that…

42. Boston College’s RFI Four Parts Cover Letter (optional) Actual RFI
Answer Sheet
Analysis Sheets
Disclosure Information
Web
Printed

43. DISCUSSION and QUESTIONS