House Adopts Crackdown on Student Loan Business

It’s not just the mess in the housing market that has the attention of the House.  Recent troubles in the student loan industry also have legislators furiously writing and approving bills, hoping to bring some sense of decency and order back.

Yesterday, the House almost unanimously – 414 to 3 – adopted a bill that would require colleges and lenders to abide by new codes of conduct; ban gifts from lenders to college aid officers; require disclosure of college-lender relationships; and protect students from aggressive marketing practices.

Pretty much all the perks of the college/lender relationship?  Gone.

After investigations led by Congress and New York Attorney General Andrew Cuomo, it turned out that there was more than a hint of impropriety between lenders and colleges.  Hence the bill.

"Corrupt practices among lenders, schools, and public officials have undermined our student loan programs," said House Speaker Nancy Pelosi in a statement, calling the bill a needed action to clean up the student loan industry.

America’s Student Loan Providers, a group that represents student lenders, backed passage of the bill. It said in a statement that revelations of misconduct "are inexcusable and have deeply embarrassed the student loan community."