Schakowsky Votes to End Unethical Practices In Student Loan Industry, Protect Students and Families

SCHAKOWSKY VOTES TO END UNETHICAL PRACTICES IN STUDENT LOAN INDUSTRY, PROTECT STUDENTS AND FAMILIES

WASHINGTON, DC–U.S. Representative Jan Schakowsky (D-IL) today joined a majority of her colleagues to approve the Student Loan Sunshine Act, which would help 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, Congresswoman Schakowsky helped pass this bipartisan bill to protect students and families who are working hard to pay for college from abuses within the student aid system.

"At a time when students and families are taking on enormous amounts of debt in order to afford college, it is completely reprehensible for lenders and colleges to engage in bribes or other corrupt practices,... said U.S. Representative Schakowsky. "Federal student loan programs were designed to help students and parents pay for college — not to help boost the profits of lenders or individuals at the expense of students. This bill will put an end to those practices and help restore the trust and faith that students and families should have in the federal student aid programs....

The Student Loan Sunshine Act was introduced in response to investigations at the federal and state level and by news organizations that 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. House Democrats continue to conduct investigations into the conflicts of interest and relationships among lenders, schools and public officials responsible for running federal student aid programs.

The Student Loan Sunshine Act would prevent these abuses 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.