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Code aims at financial aid abuse by colleges
Florida's attorney general seeks action amid investigations.
By TOM MARSHALL, Times Staff Writer
Published December 4, 2007
Florida's Board of Governors, background, are scheduled to consider the measure Thursday.
[Scott Keeler | Times]
Florida financial aid officers shouldn't accept kickbacks from lenders.
That simple rule tops a draft code of conduct scheduled to be unveiled Wednesday by Florida Attorney General Bill McCollum. It comes seven months after the state joined a wide-ranging national inquiry into lending practices at public and private universities.
Members of the state university system's Board of Governors are scheduled to consider the measure Thursday.
"Our educational institutions must protect the best interests of the student when giving out financial guidance," McCollum said in a statement. "The Florida code goes a long way toward ensuring this, and I appreciate the cooperative efforts of everyone who has worked to protect those interests."
Under the code, public university employees would be barred from accepting "anything of more than nominal value" from lenders, including cash, stocks, gifts, entertainment or paid trips.
Universities could no longer accept a share of loan revenues or other favors in return for giving preferential treatment to lenders vying for student business. Companies couldn't give away free printing, staff help, software or other services. And universities couldn't fail to tell students they had a choice of lenders.
Those practices were flourishing at many Florida schools last spring, the St. Petersburg Times found:
-At the University of Miami, officials initiated federal loans for students who never asked for them and shared their personal data with lender Sallie Mae, often without telling them of other lender choices.
-At Nova Southeastern University, lender Sallie Mae operated a campus call center at steeply discounted rates and offered the school a premium on federal loans in exchange for "exclusive endorsement and promotion" of its other loan products.
-At Florida A&M University, students were directed to lenders based on the spelling of their last name.
-At Florida State University, aid director Darryl Marshall accepted free flights and lodging to attend lender advisory board meetings, including one advisory board where other directors were later fired from their jobs for holding stock in the company.
One national expert said the Florida code could have gone further in attacking the root causes of unethical behavior.
"The proposed code sets the bar on inappropriate conduct rather low by identifying fairly obvious targets, without attempting to get at the many ways in which a regulated interest can game the system," said Barmak Nassirian, deputy director of the American Association of Collegiate Registrars and Admissions Officers.
He called the code "fairly un-ambitious" and said the state should consider adding measures that deal explicitly with private or for-profit schools, as well as third-party transactions with other companies besides lenders.
But a spokeswoman for the attorney general said her office is just getting started and plans to apply the code to its ongoing civil investigations of several private institutions.
"We've got several investigations that are ongoing with the private schools, the University of Miami in particular," said spokeswoman Sandi Copes. "Once the code is approved, we expect that to factor heavily into those investigations."
In many ways, the Florida code resembles one adopted by other states like New York, which led the nation last winter in investigating lending practices involving its students attending schools across the nation.
New York Attorney General Andrew Cuomo found numerous cases in which schools steered students toward lenders in exchange for loan revenue. Dozens of schools and lenders have signed on to that code, and paid $13.7-million into a fund to teach students about financial aid.
The proposed Florida code would require schools to give students clear information on loan terms and topromptly certify loans from any lender that a student chooses. If schools used a "preferred lender" list, they would have to explain how it chose to highlight those companies.
But the code also would allow school officials to continue receiving free meals "and other things of like value" at conferences funded by more than one entity, like last spring's lender-sponsored gathering by the Florida Association of Student Financial Aid Administrators.
Although lenders still might be paying for the steak dinner, Copes said that exception seemed reasonable as long as one lender wasn't given an advantage over others.