The University of California announced new student loan policies Wednesday, emphasizing ethical conduct between UC employees and private lenders as well as several measures to aid students in choosing private lenders for student loans.
The move comes in response to last year’s revelations that a number of universities nationwide had inappropriate relationships with lenders, including putting certain loan companies on preferred-lender lists in exchange for gifts and perks for university officials.
Under the new policy, which takes effect immediately, the UC Office of the President will work with its campuses to create a lender-rating system based on criteria that will reflect students’ best interests, according to a statement released by UCOP.
The ratings system will take into account factors such as the financial terms of loans, loan features and the quality of service students receive from different lenders. In order to accurately reflect loan providers’ service, UCOP will annually solicit loan practices and customer service policies from private lenders.
In addition to outlining a ratings system, the policy delineates standards for presenting the lenders list to students, such as organizing the material into tables that will make comparing lenders easy for students and their families.
Gabe Rose, president of the Undergraduate Students Association Council, said he welcomes the administrators’ initiative in examining an issue of concern for many students.
“I appreciate the recognition of students’ vulnerability on this issue. (Loans can) seem like a sweet deal, but we’re not lawyers,” he said.
The policy also presents strict guidelines for relationships between the UC and private lenders. UC employees will be prohibited from accepting any kind of gifts or monetary incentive to place lenders on the preferred-lenders lists, and lenders will not be able to identify themselves as UC employees.
Campuses can still receive assistance from lenders, but only under specific guidelines including approval from the campus chancellor and financial aid director.
Finally, the new policy provides guidelines for groups, such as alumni associations, and training for financial aid and office staff.
Oiyan Poon, president of University of California Students Association, said UCSA appreciates administrators taking students’ concerns into account but expressed concern that the policy will not be effective if administrators fail to inform students of its specifics.
“So long as there is outreach done so students know about it, it should be beneficial to students,” she said.
Allowing a single body to determine lenders’ ratings may lead to complications in keeping the body honest, Rose said.
“It’s easy to say we’re going to do it for the benefit of the student, but that’s a lot of power for one group of people to have,” he said.
Rose said he believes the new system is a step in the right direction but is far from solving the problem of questionable lending practices.
“It’s good to see that they’re taking steps to make progress, (but) I don’t think we should be satisfied and say we’ve fixed the problem,” he said.