Crackdown sought on ties between lenders, colleges
May 3, 2007
Three Democratic senators – Royce West of Dallas, Eliot Shapleigh of El Paso and Judith Zaffirini of Laredo – filed legislation this week to prohibit colleges from receiving gifts, stocks and other perks from companies that lend money to students.
Written by Holly K. Hacker, Dallas Morning News
Cozy relationships between student lenders and colleges, already under growing scrutiny across the country, would be banned in Texas if some lawmakers get their way.
Three Democratic senators – Royce West of Dallas, Eliot Shapleigh of El Paso and Judith Zaffirini of Laredo – filed legislation this week to prohibit colleges from receiving gifts, stocks and other perks from companies that lend money to students.
"Loan officers at universities have betrayed student trust instead of providing the lowest-cost alternative. They have used their position for private gain," Mr. Shapleigh said. "We need to stop that practice in Texas."
Mr. Shapleigh's bill, filed Wednesday, is relatively short and specific. It would ban financial aid employees at public colleges from accepting gifts from lenders or owning stock in their companies. He said he was influenced in part by reports that Lawrence Burt, financial aid director at the University of Texas at Austin, previously owned shares in the parent company of a "preferred lender" that UT recommended to students. Mr. Burt, who is on paid leave from UT, has said he did nothing wrong.
The bills by Mr. West and Ms. Zaffirini would prevent lenders from paying college employees for serving on advisory boards. Nor could lenders give colleges a percentage of the money they make on student loans. The proposals affect public and private campuses.
Mr. West's bill, the longest at 11 pages, also sets codes of conduct that lenders, colleges and all college employees would have to follow. Lenders or universities that break the rules could be fined up to $50,000, and individual college employees could be fined up to $7,500.
All three bills have been referred to the Senate higher education subcommittee, which Ms. Zaffirini chairs.
Anthony deBruyn, a spokesman for the UT System, said his office is reviewing the bills and studying their potential impact.
New York Attorney General Andrew Cuomo, U.S. Sen. Edward Kennedy and others have been investigating abuses in the $85 billion-a-year student loan industry. Mr. Cuomo has reached agreements with several lenders and more than 20 universities over their lending practices. Texas Christian University in Fort Worth, for instance, received almost $14,000 from a lender and plans to return the money to students.
Fair Use Notice
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a "fair use" of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond "fair use", you must obtain permission from the copyright owner.