FOR IMMEDIATE RELEASE
Friday, May 4, 2007

Isakson Co-Sponsors Legislation to Hold Student Loan Providers Accountable

WASHINGTON – U.S. Senator Johnny Isakson (R-Ga.) today announced he is co-sponsoring legislation to hold colleges, lenders and loan guaranty agencies that provide student loans accountable to a lender’s code of conduct.

“Student loans help keep the dream of a college education within reach of many Americans,” Isakson said. “We must ensure that students who invest in this worthy endeavor have straightforward, honest and comprehensive information on which to base their decisions.”

The Student Loan Accountability and Disclosure Reform Act will establish a Code of Conduct for institutions of higher education that prohibits colleges and their employees from receiving anything of value from any lender in exchange for advantages sought by the lender.  The prohibition applies to gifts and trips as well as compensation for service on advisory boards and consulting contracts.     

The legislation would prohibit institutes of higher education from designating “preferred lenders” and sending unsolicited electronic mailings to potential borrowers. It would also require colleges to provide students and parents with a guide that enables them to do their own evaluation of the loan products, benefits and services offered by the lenders.

This legislation comes in response to state and federal probes of unethical practices in the $85 billion student loan industry.   Secretary of Education Margaret Spellings announced last month that a federal task force will examine the ties between lenders and college financial aid officers. New York Attorney General Andrew Cuomo’s office has uncovered numerous financial arrangements that benefited schools and lenders at the expense of students, and other state attorneys general are also investigating the industry.

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