On May 10, 2007, the House of Representatives overwhelmingly passed the Student Loan Sunshine Act, H.R.890, to ban gifts and payments by student loan companies to universities. Representative George Miller (D-California), who leads the House education committee, joined Representative Howard McKeon (R-California) in co-drafting the legislation, exhibiting a bipartisan determination to get the $85 billion industry cleaned up.
Passage of the bill, by a vote of 414 to 3, followed recent revelations that lenders paid university financial aid officials money contingent on student loan volume, gave gifts to the financial aid administrators whom students rely on to recommend lenders, and hired financial aid officials as paid consultants.
The Sunshine Act:
1. Requires institutions and lenders to adopt strict codes of conduct that adhere to specific guidelines.
2. Ensures that students have access to all lenders of their choice, including those not on the preferred lender lists.
3. Bans staffing of school financial aid offices by lenders.
4. Gives students full and fair information when taking out and repaying loans.
5. Protects students from aggressive marketing practices.
6. Provides students information on all federal student aid opportunities through a new “one-stop” link on the Department of Education Web site.
In a time when tuition is steadily rising and many students depend on financial aid for an education, the issue is becoming a political hot topic. The nation’s four largest student lenders and at least 22 colleges have already signed on to a code of conduct developed by Attorney General Andrew Cuomo of New York. On May 7, 2007, New York’s legislature passed the Student Lending Accountability, Transparency and Enforcement Act of 2007 to address conflicts of interest in the student-loan industry.