Student loan scandal prompts passage of bill
>>Print ViewPublication Date: 05/18/2007
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The Student Loan Sunshine Act is aimed at preventing conflicts of interest among lenders and universities.
The bill, according to the Indiana House of Representatives' Committee on Education and Labor, will shield students from unethical processes by requiring institutions to disclose all relationships with lenders, banning all gifts and special agreements between lenders and schools and giving more information to students. It passed the house with a landslide vote of 414-3.
The bill is a response to the recent loan scandals that have brought difficult questions to several Indiana schools.
Call centers on several Indiana University campuses have already been shut down by the investigation, due to being staffed by employees of the nation's largest student loan provider who were allowed to give students financial advice.
IU, Notre Dame and Butler were all also named in industry investigations.
Purdue has not been singled out, though Joyce Hall, director of financial aid, has served unpaid for several years on the advisory council at Sallie Mae.
"Having (Hall) serve with the Sallie Mae advisory group has been valuable," said Purdue spokesman Joseph Bennett.
He said the school's reading of the actual law passed, H.R. 890, indicates there are exceptions that allow lenders to pull together individuals from schools "for training, to receive feedback on their products, and to also offer professional development opportunities to school personnel."
He added that Sallie Mae had not and would not pay or gift advisors, and that Purdue has been very careful to ensure that there is no conflict of interest in regards to the preferred lender status that Sallie Mae currently enjoys.
Sallie Mae ends up with about 96 percent of undergraduate loans, Bennett said.
As for the bill's other intentions, he said, "Obviously if student loan interest rates were cut that would be a good thing for students."
Also supportive was Rep. Baron Hill, who voiced his support in a press release after the vote.
"College affordability is an incredibly important issue and should not be taken lightly," said Hill, D-Ind.
"We need to root out any inappropriate behavior occurring between lenders and schools and make sure students and their families are getting every penny's worth of their college loans."
Also in response to the scandals, the Indiana House has passed a resolution that calls for an interim committee to study student loan affordability.