University of Wisconsin campuses would be barred from accepting payments from student loan companies in exchange for recommending them to borrowers under a proposal that will be considered for approval this week.
The policy aims to reassure the UW System's students, who took out a record $592.7 million in loans last year, that campus administrators are looking out for their best interests amid a national scandal in the industry. The plan would also guide UW employees and companies on how to avoid unseemly relationships.
The UW System Board of Regents, which governs the 13 four-year universities and 13 two-year colleges, is expected to consider the plan during meetings at UW-Milwaukee on Thursday and Friday.
Regents ordered system leaders to develop the plan last month after an investigation by New York Attorney General Andrew Cuomo uncovered unethical relationships between universities and lenders nationwide.
His probe found some lenders paid colleges to recommend them and gave administrators gifts to encourage them to steer borrowers their way.
UW System spokesman David Giroux said the new policy may be among the strongest in the nation and could serve as a model for other states.
"This policy, once it's implemented, will really create a very sound firewall between our university administrators and any institution engaged in student lending," he said.
The rules come as borrowing is increasing dramatically among the system's 160,000 students. System statistics show more than half of all students borrowed money last school year, compared to one-quarter in the late 1980s. In-state students who earned four-year degrees last year had an average debt of $19,809.
Giroux said the system's internal review has uncovered only a handful of questionable practices and led to changes but no discipline against employees.
The changes include the cancellation of a loan revenue-sharing agreement between UW-Oskhosh and Education Finance Partners that had yielded about $10,000 for the campus. Such agreements would be barred under the new rules.
UW-Milwaukee financial aid director Jane Hojan-Clark also recently stepped down from an advisory board of Student Loan Xpress, one of the college's preferred lenders. She did not receive compensation for the service but the company paid for her trips to meetings.
The new rules would allow UW employees to serve on advisory boards as long as they are not compensated or reimbursed in any way.
The plan would allow campuses to maintain lists of preferred lenders as long as they contain at least three companies and lenders are selected after a critical evaluation of their services. Students would have to be informed they do not have to borrow from those on the lists.
Giroux said some Wisconsin campuses keep such lists while others, including the flagship UW-Madison campus, do not. The lists have ranged from as few as one company to more than a dozen, he said.
Campuses would be barred from accepting financial incentives from companies in exchange for putting them on the lists. Any agreement in which a company "provides fees, revenue sharing or material benefits to UW institutions or employees" would be prohibited.
UW employees would be allowed to receive training from companies on things like lending laws and debt management. Universities would have to pay for employees to travel to training events if the workers have influence over the selection of lenders. In some cases, preferred lenders have paid for UW officials' travel to events.
Employees would be barred from accepting gifts from them, although that's already prohibited under state ethics rules.
Campuses also could not accept companies' offers to operate call centers to help them respond to financial aid inquiries from students. In cases involving other colleges, company representatives sometimes identified themselves as university employees.
Rep. Steve Nass, R-Whitewater and chairman of the Assembly Colleges and Universities committee, has pledged to hold a hearing on the issue next month to learn more about steps universities are taking to clean up any problems in the state.Labels: academy awards, career training, education online, financial aid, free education, high school, student loans, study abroad |
