The New York Legislature has given final passage to a bill designed to protect students and their families from exploitation by conflicts of interest in the student-loan industry.
Attorney General Andrew M. Cuomo says passage of the bill -- called The the Student Lending Accountability, Transparency and Enforcement (SLATE) Act of 2007 -- makes New Yorks legislature the leader in offering a solution to the student-loan scandal that has affected millions.
Cuomo says the new law addresses problems exposed as a result of an ongoing investigation into the widespread conflicts of interest throughout the $85 billion-per-year student loan industry.
The measure codifies Cuomos College Loan Code of Conduct, which is the basis for case settlements with the lenders and schools across the country. Congressional leaders have endorsed the SLATE legislation as a national model and dozens of schools and lenders have already adopted the Code of Conduct.
While my investigation into the $85 billion-a-year college loan industry expands, I applaud the Legislature for committing to ensure that New Yorks college bound students are protected as they finance their education, Cuomo said.
New Yorkers will have the confidence in knowing that state law will be on their side when dealing with the college loan industry. The passage of this landmark legislation underscores New York governments legacy of putting forth progressive, effective legislation and leading the nation by example.
The Student Lending, Accountability, Transparency and Enforcement Act:
• Prohibits lenders from making gifts including the practice of revenue sharing to colleges and universities or their employees in exchange for any advantage in loan activities
• Bans colleges and universities from soliciting, accepting or receiving any gifts whatsoever including those construed as part of a revenue sharing practice from lenders in exchange for advantageous loan consideration
• Bars college and university employees from receiving any advantage, reimbursement or benefit from serving as a member of a lenders advisory board
• Bans lenders and schools from agreeing to certain quid-pro-quo high-risk loans that prejudice other borrowers or potential borrowers
• Prohibits schools from linking or directing potential borrowers to any electronic master promissory notes or other loan agreements that do not allow students to enter a lender code or name for any lender offering the relevant loan at that guarantee agency
Furthermore, the law dictates strict criteria that schools continuing to use preferred lender practices must abide by.
