Attorney General's News Release

July 19, 2007

Six more Missouri colleges enter into code of conduct agreements with Nixon regarding student loan industry

Jefferson City, Mo. — Attorney General Jay Nixon announced today that six more Missouri colleges representing almost 22,000 students have agreed to abide by codes of conduct regarding their relationships with the student loan industry. To date, 18 Missouri universities and colleges representing 71,000 students have reached such agreements with the Attorney General’s Office.

Nixon says the agreements will help assure that students who borrow money to attend the institutions will have adequate information and protection when choosing a lender.

“As they consider lending options that best fit their situations, students and their families need to make those borrowing decisions with sufficient and appropriate information,” Nixon said. “The loan process can be intimidating, especially in preparing for the first year. These colleges are doing a valuable service for current and future students and those students’ families.”

The latest Missouri institutions to enter into code of conduct agreements with Nixon are Crowder College, in Neosho; Lincoln University, in Jefferson City; Linn State Technical College, in Linn; Missouri Western State University, in St. Joseph; North Central Missouri College, in Trenton; and Ozarks Technical Community College, in Springfield. Each of the schools provided Nixon with documents and responses to his investigation into student lending practices.

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.

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.

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 Press Secretary John Fougere.

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