1. Report on Marketing Practices in the Federal Family Education Loan Program
- Author
-
Congress of the U.S., Washington, DC. Senate Committee on Health, Education, Labor, and Pensions.
- Abstract
This report was prepared by the Chairman's Staff of the Senate Health, Education, Labor and Pensions Committee setting forth the findings of an investigation into marketing practices in the Federal Family Education Loan program ("FFEL"). Evidence uncovered by the Chairman's investigation demonstrates that many FFEL lenders routinely engage in marketing practices that violate the letter and spirit of the inducement prohibition of the Higher Education Act. Given the breadth of the evidence presented in this report it is clear that the problem is systemic and cannot be isolated to a few "problem" lenders or schools. The report addresses a discrete set of marketing practices including: (1) Some FFEL lenders provided compensation to schools with the expectation, and in some cases an explicit agreement, that the school will give the lenders preferential treatment, including placement on the school's preferred lender list; (2) Other FFEL lenders spent large sums on travel and accommodation expenses for meetings of Advisory Boards comprised of school officials, and often expected these benefits to yield increased loan volume, or other preferential treatment, at Board members' schools; (3) School officials held financial interests, including stock and options to purchase stock, in FFEL lenders which are on the preferred lender list or are otherwise recommended to students; and (4) School officials received payments for consulting and other services from FFEL lenders which are on the preferred lender list or are otherwise recommended to students. (Contains 52 notes and 118 exhibits.)
- Published
- 2007