This week, my Assembly colleagues and I passed a bill that will hold student lenders and colleges accountable for shady lending practices. The practices led to windfall profits and gifts for colleges and lenders, while leaving students paying higher interest rates for their college loans.
It is deplorable that colleges and lenders would betray students who came to them for financial assistance by steering them toward certain lenders. I applaud the state Attorney General for bringing this issue to the forefront and I am proud that I could do my part in the state Legislature to end this practice by passing important legislation.
The bill I voted for will establish a code of conduct for lenders and institutions of higher learning by instituting the following measures:
- Prohibit lenders from making gifts, and colleges and universities from accepting gifts in exchange for any advantage or consideration for their educational loan activities;
- Prohibit employees from serving in a dual capacity, either on the board of a lender or an employee or agent of a college or university;
- Require colleges to disclose to borrowers and potential borrowers all available financing options available under federal law; and
- Require a lender, upon request, to disclose the default rates, rates of interest charged to borrowers, and the number of borrowers receiving those rates.
In today’s society, a college degree holds a lot of weight in determining the type of job and economic success an individual will have in life. By passing this legislation, we will ensure that schools and lenders do not seek to enrich themselves through shady lending practices at the expense of students and families.