The Federal Department of Education released new guidelines Friday regulating universities’ relationships with student loan companies and requiring schools to disclose more information about their preferred-lender lists to students.
In accordance with the new rules, universities would have to include at least three lending companies on their preferred-lender lists, and would also have to describe to students how those companies were chosen.
Additionally, colleges would no longer have access to any sort of benefits provided by federal loan companies in exchange for more student customers, according to The New York Times.
The rules are aimed at reforming what many have called inappropriate relations between lending companies and many colleges and universities.
Several months ago, an investigation by New York Attorney General Mario Cuomo revealed conflicts of interest such as schools putting certain companies on their preferred-lender lists in exchange for gifts and other benefits.
In the wake of the investigations, a number of university officials nationwide have resigned.
But the list does not include information on how those firms were selected for a spot on the preferred-lender list.
The University of California has not been implicated in any student-loan investigations so far, and system President Robert Dynes said in an April statement that he did not expect the university to come under fire for its practices.
“Our practices in this area have been driven by the goal of minimizing financial barriers to student attendance at the university and reflect the principle that lending practices should be focused on maximizing benefits to borrowers,” Dynes said in the statement.
“Assistance provided by student loan providers should be for the ultimate benefit of borrowers, not an individual employee of the campus,” he said.
Compiled by Julia Erlandson, Bruin senior staff.