Rep. Gillibrand Votes to End Unethical Practices in Student Loan Industry

Press Release

Rep. Gillibrand Votes to End Unethical Practices in Student Loan Industry

Rep. Gillibrand today voted to approve the Student Loan Sunshine Act, bipartisan legislation that would clean up the relationships between student lenders and colleges. With evidence mounting of conflicts of interest and other unethical practices in the student loan industry, Rep. Gillibrand said today that this bill was urgently needed to better protect students and families who are working hard to pay for college from abuses within the student aid system.

"I applaud the strong leadership of Attorney General Cuomo in exposing these outrageous practices." Gillibrand said. AG. Cuomo 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.

"At a time when working families are taking on enormous amounts of debt in order to afford college, it is unacceptable for lenders and colleges to engage in corrupt practices," said Rep. Gillibrand . "Federal student loan programs are in place to help students and parents pay for college - not to help boost the profits of lenders or individuals. This bill will put an end to those practices and help restore the trust that students and families deserve to have in the federal student aid programs."

House Democrats first introduced the Student Loan Sunshine Act in February, and are currently conducting investigations into the conflicts of interest and relationships among lenders, schools, and public officials responsible for running federal student aid programs. The legislation passed by the House today was expanded to fully address the egregious practices that had been unearthed since the Sunshine Act was first introduced.

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 risk-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;

Ensuring that schools process all loans, from any lender, and do not steer students away from their first choice;

Giving students full and fair information when taking out and repaying loans; and

Protecting students from aggressive marketing practices.

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