Attorney General's News Release

June 20, 2007

Nixon enters into code of conduct agreements with 11 more Missouri colleges regarding student loan industry

Jefferson City, Mo. — Eleven Missouri institutions of higher education, both public and private and representing more than 49,000 current students, have agreed to abide by codes of conduct regarding their relationships with the student loan industry, Attorney General Jay Nixon announced today. Nixon praised the agreements as helping assure that students who borrow money to attend the institutions will have adequate information and protection when choosing a lender. In April, Nixon reached a similar agreement with Washington University in St. Louis.

“These colleges and universities are doing a valuable service for current and future students and those students’ families,” Nixon said. “The loan process can be intimidating, especially in preparing for the first year. Students and their families may feel unempowered as consumers, particularly if they are steered to certain lenders without receiving enough information to make the choices that are most appropriate. These agreements help address our concerns about students and parents being able to make the borrowing decisions that are best for their situations.”

The Missouri institutions that have entered into code of conduct agreements with Nixon are Avila University, in Kansas City; Drury University, in Springfield; Hannibal-LaGrange College, in Hannibal; Mineral Area College, in Park Hills; Missouri Valley College, in Marshall; Northwest Missouri State University, in Maryville; Park University, in Parkville; Southwest Baptist University, in Bolivar; State Fair Community College, in Sedalia; and Three Rivers Community College, in Poplar Bluff; and the University of Central Missouri, in Warrensburg. Each of the schools provided Nixon with documents and responses to his investigation into student lending practices.

Over the last several months, Nixon and other Attorneys General across the country have been looking into student loan lenders and their relationships with higher education institutions. Nixon has expressed concern about, among other things, students being steered by universities to “preferred lenders” without the students and their families receiving information about how those lists were compiled; revenue-sharing arrangements that reward institutions of higher education that put lenders on such lists; and gifts being given by lenders to institutions of higher education or their employees.

The codes of conduct include:

• A prohibition on certain remuneration to the schools, specifically through revenue-sharing agreements, and a prohibition on remuneration to school employees.
• Required disclosures related to preferred lending lists. The school would be required to adequately inform students and their parents of the school’s decisions regarding its preferred lender list.
• A prohibition on steering students to certain lenders’ master promissory notes (MPNs). Students are often provided MPNs in paper or electronic form. The Code of Conduct will ensure that the lender box on the MPN is not pre-selected, so the student has the opportunity to enter his or her own choice.
• A limitation on school employees’ participation on lender advisory boards in exchange for compensation or reimbursement of any expense.

The colleges and universities also agreed to cooperate with any further investigation by the Attorney General’s Office into matters regarding lending practices. Nixon said he anticipates entering into similar agreements with additional Missouri institutions of higher education in the future.

On Tuesday (June 19), Nixon and 31 other Attorneys General sent a letter to leaders of the U.S. Senate urging them to quickly pass the Student Loan Sunshine Act to safeguard students and families nationwide from deceptive practices in the college loan industry.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Communications Office.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818