April 2, 2007

 

To the St. Lawrence University Community:

At a press conference today New York State Attorney General (AG) Andrew M. Cuomo announced that his office has negotiated agreements to abide by a student loan code of conduct with a number of the colleges and universities to which his office had earlier sent a series of questions regarding student loan practices and relationships with student loan lenders.  We received a list of 28 questions that we answered promptly and fully about our practices and relationships with lenders. 

Last week I signed, on behalf of St. Lawrence, the Attorney General’s student loan Code of Conduct statement.  I am pleased and proud to go on record in that way to affirm our long-standing commitments to ethical conduct and the avoidance of conflicts of interest in the student loan arena.  Our philosophy and our policy with regard to everything about student aid at St. Lawrence is to be open, transparent, enabling (the purpose of our large and comprehensive programs of student aid is to make it possible for our students to afford to attend St. Lawrence), student- and family-centered, and constantly mindful of the interests and needs of students and families.

Indeed, all officers of the university, including our Vice President and Dean and Admissions and Financial Aid, already sign and subscribe to our own Board of Trustees-approved Code of Conduct and Conflict of Interest Policy.  We agree with the Attorney General that ethical conduct and avoidance of conflicts of interest are required with regard to student financial aid policies and practices, and especially with regard to our student loan practices and our relationships with student loan lenders.

However, the AG’s Code of Conduct is not simply an expression of standards and values to which we agree to adhere.  The document begins with a litany of problematic practices throughout the industry he has discovered through his investigation of institutions’ and lenders’ student loan practices and relationships.  With regard to St. Lawrence University, the agreement calls into question two actions:

1. Reimbursement of expenses: A member of our financial aid staff was asked to join a Nellie Mae advisory committee and she accepted.  Shortly thereafter, she accepted a position at another institution and so was able to attend only one meeting of this advisory committee. She drove to a one-day meeting in Syracuse, returning to Canton in the same day. Her travel expenses were reimbursed by Nellie Mae.  The AG accepts that participation on such advisory boards can have both positive staff development benefits and benefits for the university.  We were asked by the AG if we would find it acceptable and feasible, if ever a staff member is invited to be on an advisory board again, to have the university pay the travel expenses in order to avoid any appearance of conflict of interest.  We said “yes.”

Two members of our financial aid staff were invited to visit the headquarters operation of another lender in Knoxville, Tennessee, in order to come to understand the “back office” operation of a major lender so that we would be better able to counsel students and families on what to expect from such lenders and so that we would be better able to relate to them ourselves.  The trip lasted two days and the time was devoted to an extensive orientation into how the lender’s back office worked, as planned.  The lender did not condition the trip in any way on our steering student loans to them.  We were asked by the AG if in the future the university could pay the travel expenses of employees for such visits.  We said “yes.”

1. Printing:  The University has for several years accepted offers from lenders to print for us materials about loans—inexpensive two-color printing, essentially copying—that we wanted to send to groups of students and families for whom such material might be relevant.  We estimate the total cost over several years for such printing to be in the neighborhood of $3,800.  When asked if we would be willing in the future to print and pay for such materials ourselves, we said “yes.”

In all three cases we said “yes” with regard to our future behavior not because there was in any of these cases a conflict of interest but because it is possible for someone to imagine that there might be, as has the Attorney General. 

The Attorney General’s document then proceeds to define a code of conduct for colleges and universities to follow in their student loan practices.  The provisions of this code of conduct are reasonable and appropriate, and so I have signed it on behalf of the University.

I go into this detail because our agreement with the Attorney General is a public document, and I want you to know in advance the nature of the AG’s criticism of our student loan activities and relationships with lenders.  We have found it useful, actually, to have our student loan activities and relationships with lenders subjected to this kind of audit scrutiny.  One always learns ways to better approach best practices in such a process.  At the same time I want to reassure you that the St. Lawrence actions that the AG found possibly problematic are easily avoidable in the future.

Today’s press release from the Attorney General, you need to know, contains text that may be misleading.  In paragraph 1 of his statement it says:  “The settlements require schools to reimburse students money that the colleges were paid by lenders for loan business . . .”  The next paragraph opens with:  “The schools include . . . . . . St. Lawrence University and . . . . . .”  The text implies that St. Lawrence was paid by lenders for loan business and must reimburse.  Just below, of course, is the list of institutions required to reimburse, and we are not on it because we have never, ever entered into such arrangements with lenders.

On the second page of the Attorney General’s release it says:  “The SUNY, Fordham, LIU, St. Lawrence and St. John’s settlements covered their relationships with San Francisco-based Education Finance Partners (EFP) and/or other lenders.”  And the next paragraph begins:  “The money will be distributed back to the individual students . . .”  St. Lawrence has never used EFP as a lender.  This is important for you to know because the Attorney General has initiated legal action against EFP.  The text may lead the reader to believe both that St. Lawrence’s settlement covered a non-existent relationship with EFP and, again, that St. Lawrence will be distributing money back to students.

To me, to my colleagues here, and to the University’s Board of Trustees, enabling students and their families to afford to attend St. Lawrence is a sacred responsibility that we take on almost with a kind of religious fervor, and literally thousands of our alumni, parents and friends, and corporations and foundations each year support with their gifts and grants our efforts to make it happen.  To be true to the spirit as well as the fact of our commitment, our student aid program must function in the most ethical way.  We believe that is what the Attorney General found in his investigation of us.