Assemblywoman Janet L. Duprey (R,I,C-Peru) this week voted for sweeping changes in the student loan process in New York state. Duprey voted for the newly created “Student Lending Accountability, Transparency and Enforcement (SLATE) Act.” The measure recently passed both houses of the state Legislature, and is waiting to be signed by the governor.
In early 2007, the state Office of the Attorney General commenced a nationwide investigation into the college loan industry. “That investigation, which is ongoing, exposed many faults with the current student loan process; including deceptive loan practices, unusually high interest rates, and unfair loan payment agreements. That led to my support of the SLATE Act, which I voted in favor of this week,” Duprey noted.
“This is a good fiscal bill. What I voted for will afford college students and their families new and needed protections, while punishing those who exploit the college lending process for personal profit or their own financial gain,” Duprey said.
The new Act seeks to do the following:
- Prohibit lenders from making gifts to colleges and universities in exchange for any advantages or special consideration or revenue sharing;
- Prohibit colleges and universities from soliciting, accepting, or receiving gifts from lenders in exchange for special advantages or considerations;
- Prohibit employees of colleges and universities from receiving payment for serving as members or participants of “lender advisory boards”;
- Provide that colleges and universities, which use "preferred lender" lists, to comply with clearly defined standards. And, it bars certain quid pro quo high risk loans that prejudice other borrowers or potential borrowers;
- Require colleges to fully disclose to borrowers and potential borrowers who consult a covered institution’s financial aid office; and
- Require that violations of the Act by a lender or covered institution result in a civil penalty not to exceed $50,000 and $7,500 for violations by employees of covered institutions. Lenders found in violation of this article will be barred from a preferred list until notice that is provided to all potential borrowers of the college or university.
“Importantly, the measure creates a "Student Lending Education Account" in the joint custody of the state Comptroller and Commissioner of Taxation and Finance,” Duprey noted.
The revenue deposited into this account will be used to support programs to educate borrowers and their families as to the student loan process and to reimburse students that were charged inflated loan prices caused by unfair revenue sharing agreements.
“All available financing options under federal law should be fully disclosed. I am confident that this measure will help students and their families, while improving the lending process,” Duprey concluded.