Hannon: Legislature Passes Legislation Protecting Students

New York State Senator Kemp Hannon (R-6th S.D.) announced the passage of landmark legislation to protect students and their families from exploitation by conflicts of interest in the student-loan industry. The passage of the bill makes New York's Legislature the leader in offering a solution to the student-loan scandal that has affected millions.

The Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007 addresses problems exposed as a result of the Attorney General Andrew Cuomo's ongoing investigation into the widespread conflicts of interest throughout the $85 billion-per-year student loan industry. The measure codifies Cuomo's College Loan Code of Conduct, which is the basis for case settlements with the lenders and schools across the country. Congressional leaders have endorsed the SLATE legislation as a national model and dozens of schools and lenders have already adopted the Code of Conduct.

Senator Hannon said, "With the cost of obtaining a college education rapidly increasing, our children and parents should not have the added concern of dealing with unscrupulous lenders looking to make a profit at their expense. This legislation is a first-in-the-nation step to ensure that students and their families will not be exploited by fraudulent lending practices, and will provide more transparency and accountability in the student loan industry."

The Student Lending, Accountability, Transparency and Enforcement Act:

1.Prohibits lenders from making gifts - including the practice of revenue sharing - to colleges and universities or their employees in exchange for any advantage in loan activities

2.Bans colleges and universities from soliciting, accepting or receiving any gifts whatsoever - including those construed as part of a revenue sharing practice - from lenders in exchange for advantageous loan consideration

3.Bars college and university employees from receiving any advantage, reimbursement or benefit from serving as a member of a lender's advisory board

4.Prohibits lender employees and agents from posing as college or university employees, including staffing the school's financial aid offices with lender employees

5.Bans lenders and schools from agreeing to certain quid-pro-quo high-risk loans that prejudice other borrowers or potential borrowers

6.Prohibits schools from linking or directing potential borrowers to any electronic master promissory notes or other loan agreements that do not allow students to enter a lender code or name for any lender offering the relevant loan at that guarantee agency

Furthermore, the law dictates strict criteria that schools continuing to use "preferred lender" practices must abide by.