Student loan companies: PSU not for sale

In some states, student loan companies have been giving incentives to university officials who endorse the companies to students. The Portland State Financial Aid Office, however, does not accept any incentives or promote any specific student loan companies to students, according to PSU Director of Financial Aid Phillip Rodgers.

Rodgers, who has been with the PSU financial aid department since 2006, said the financial aid office at Portland State is already bound by regulations banning such practices.

The PSU financial aid department is already operating under state and university ethics codes, which strictly forbid accepting incentives from student loan companies attempting to receive endorsements from universities, said Rodgers.

“There are some lenders out there who are aggressive,” said Rodgers about pressure coming to accept incentives. “Those lenders know where they can and cannot go.”

New York Attorney General Andrew M. Cuomo has been investigating these situations since January, resulting in the scrutiny of many national universities.

Lewis and Clark College recently chose to no longer accept financial or personal incentives, such as stock shares in a student loan company.

Lewis and Clark is one of 20 schools to recently adopt the ethical standards in Cuomo’s code of conduct, which strictly forbids a university from accepting benefits of any kind from lenders. Cuomo’s code of conduct was created after The New York Times reported that three colleges had received such incentives.

At Portland State, lenders that apply to be on the school’s preferred-lender list must fulfill all of the requirements specified in a request for proposal, said Heather Mattioli, assistant director of financial aid.

The request for proposal specifies that a three-person committee will evaluate lenders. Each lender can receive a total of 100 points according to how they fulfill the criteria detailed in the request.

Criteria used to judge lenders are history and reputation, a good track record for delivering loans on time, the availability of online support services, education for students about student loans and using them responsibly, and customer service.

All of the lenders who fulfill the criteria are listed alphabetically on the web and on paper lists. Customer service ratings alone account for 40 percent of the total points available to each lender.

The process is just like any other service which might be contracted out to an outside entity, said Mattioli, who has served as loan services coordinator since 2005.

“We just make an objective comparison,” Mattioli said.

The job of the financial aid department, Mattioli said, is to help students choose a lender that can work with the school to get the funds to students in a quick and safe manner.

Portland State has done a good job so far, said Rodgers.

“Thank god we’ve given it out correctly so far,” he said.

Mattioli said that financial aid counselors should not, however, be advising students about which specific lender to choose.

A financial aid counselor at Portland State provided similar answers when asked these questions. While the counselor did not recommend a particular loan company, they did say which lender has the largest volume.

“The interest rate is going to be pretty much the same at all of them,” said the counselor.

“However, Sallie Mae is definitely the largest lender nationally and at PSU.”

In response the Cuomo’s investigation, the U.S. House of Representatives passed the Sunshine Act, a bill which purportedly would “help put an end to the vicious cycle of debt perpetuated by lenders and their university partners, ” according to a press release from Cuomo.

After passing the House, Cuomo urged the Senate and President Bush to expedite passing this legislation in order to make it law.

The Portland State Financial Aid Office distributes between $130 and $140 million to students annually, Rodgers said.