Lending Code of Conduct
Code of Conduct Governing Relationships with Student Loan Lending Institutions
University personnel shall abide by the following rule concerning relationships with student loan Lending Institutions.
- Prohibition of Certain Remuneration to University Personnel
- No University official, employee, or agent shall accept anything of more than nominal value on his or her own behalf or on behalf of another from or on behalf of a Lending Institution, except that this provision shall not be construed to prohibit any University official, employee, or agent from conducting (a) non-University business with any Lending Institution; or (b) University business unrelated to education loans. As used in the preceding sentence and throughout this rule, a Lending Institution is defined as:
- Any entity that itself or through an affiliate engages in the business of making loans to students, parents or others for purposes of financing higher education expenses or that securitizes such loans; or
- Any entity, or association of entities, that guarantees education loans, other than the Missouri Department of Higher Education; or
- Any industry, trade or professional association that, to the best of the University’s knowledge after reasonable inquiry, receives money from any entity described above in subdivisions a. and b., unless:
- Such money received by the association is in the form of membership dues or some comparable type of payment
- Such money is fixed for all members of the association; and
- Such association’s membership is comprised by at least 51% of entities and individuals who do not originate, service, or guarantee student loans;
- The term Lending Institution shall not include a not-for-profit entity that does not originate loans and that provides a network for accessing and exchanging data involved in the processing of loans that is open on equal terms to lenders that wish to participate in the network.
Nothing in this provision or throughout this rule shall prevent the University from holding membership in any nonprofit professional association.
The prohibition set forth in the previous subsections shall include, but not be limited to, a ban on any payment or reimbursement by a Lending Institution to a University employee for lodging, meals, or travel to conferences or training seminars unless such payment or reimbursement is related solely to non-University business or University business unrelated to education loans.
- Limitations on University Personnel Participating on Lender Advisory Board—No University official, employee, or agent shall receive any remuneration for serving as a member or participant of an advisory board of a Lending Institution, or receive any reimbursement of expenses for so serving, provided, however, that participation on advisory boards that are unrelated in any way to higher education loans shall not be prohibited by this rule.
- Prohibition of Certain Remuneration to the University—The University will not accept on its own behalf anything of value from any Lending Institution in exchange for any advantage or consideration provided to the Lending Institution related to its education loan activity. This prohibition shall include, but not be limited to, (i) “revenue sharing” by a Lending Institution with the University, (ii) the University’s receipt from any Lending Institution of any computer hardware for which the School pays below-market prices and (iii) printing costs or services. Notwithstanding anything else in this subdivision, the University may accept assistance as contemplated in 34 CFR 682.200(b)(definition of “Lender”)(5)(i), or any successor provision. “Revenue sharing” refers to an arrangement whereby a Lending Institution pays a school a percentage of each loan directed to the Lending Institution from a borrower at the University.
- Preferred Lender Lists – In the event that the University promulgates a list of preferred or recommended lenders or similar ranking or designation (“Preferred Lender List”), then
Every brochure, web page or other document that sets forth a Preferred Lender List must clearly disclose the process by which the lenders on said Preferred Lender List were selected, including but not limited to the criteria used in compiling said list and the relative importance of those criteria; and
Every brochure, web page or other document that sets forth a Preferred Lender List or identifies any lender as being on said Preferred lender List shall state in the same font and same manner as the predominant text on the document that students and their parents have the right and ability to select the education loan provider of their choice, are not required to use any of the lenders on said Preferred Lender List, and will suffer no penalty for choosing a lender that is not on said Preferred Lender List.The decision to include a Lending Institution on any such list and the decision as to where on the list the Lending Institution’s name appears shall be determined solely by consideration of the best interests of the students or parents who may use said list without regard to the pecuniary interests of the University;The constitution of any Preferred Lender List shall be reviewed no less than biennially;No Lending Institution shall be placed on any Preferred Lender List unless the said lender i) provides assurance to the University and to student and parent borrowers who take out loans from said Lending Institution that the advertised benefits upon repayment will continue to inure to the benefit of student and parent borrowers regardless of whether the Lending Institution’s loan are sold, or ii) discloses to student and parent borrowers that advertised benefits upon repayment may be lost in the event that the loan is sold and such disclosure is presented in a manner that is readily apparent to student and parent borrowers;
No Lending Institution that, to the best of the University’s knowledge after reasonable inquiry, has an agreement to sell its loans to another unaffiliated Lending Institution shall be included on any Preferred Lender List unless such agreement is disclosed therein in the same font and same manner as the predominant text on the document in which the Preferred Lender List appears;
No Lending Institution shall be placed on any Preferred Lender Lists or in favored placement on any Preferred Lender Lists for a particular type of loan, in exchange for benefits provided to the University or to the University’s students in connection with a different type of loan;
Beginning July 1, 2008, no Lending Institution shall be placed on any Preferred Lender List unless said Lending Institution has adopted or agreed to abide by a lending code of conduct that contains principles similar to those established in this rule.
- Prohibition of Lending Institutions’ Staffing of Financial Aid Offices—The University may not allow and shall ensure that no employee or other agent of a Lending Institution is identified to students or prospective students or their parents as an employee or agent of the University in connection with educational loan activities. No employee or other agent of a Lending Institution may staff a financial aid office or call center at any time.
- Proper Execution of Master Promissory Notes—The University shall not link or otherwise direct potential borrowers to any electronic Master Promissory Notes or other loan agreements that do not allow students to enter the lender code or name for any lender offering the relevant loan.
- School as Lender—If a campus participates in the “School as Lender” program under 20 U.S.C. § 1085(d)(1)(E), or any successor provision, School As Lender loans may not be treated any differently than if the loans originated directly from another lender; all sections of this rule apply equally to such School as Lender loans as if the loans were provided by another lender.
- Prohibition of Opportunity Loans—As used herein, “override pools,” “opportunity funds,” and “opportunity loans” refer to any agreement, understanding or practice in which a lender applies more lenient loan underwriting criteria than it otherwise would to a certain class of loan applicants if the campus or University meets certain milestones or metrics with respect to other loans with that lender, such as the number of loans initiated or in force, or the dollar amount of such loans, or where the lender agrees with the University to lend money to students outside the Federal Family Education Loan Program (FFELP), at the direction of the University, in exchange for the University or a campus dropping out of the federal direct loan program and/or marketing the lender’s separate FFELP loans to students.
The University shall not arrange with a Lending Institution to participate in any override pools, opportunity funds, opportunity loans, as defined above, if the participation in such program(s) disadvantages any other borrower.