The Tripod

Trinity College, along with other members of the Connecticut Conference of Independent Colleges, has adopted a new Financial Aid Code of Conduct after an investigation by the Connecticut Attorney General of student lending practices.

The new policy limits the amount of compensation from lenders that colleges can receive. This includes money, lodging, meals, or travel to conferences or training seminars -- anything valued at more than $50. Other aspects of the policy include hiring procedures for former workers at lending companies. In the event that a school hires someone who worked for a lender within one year prior to the hire date by the school, that individual is prohibited from dealing with its former lender employer on behalf of the school for a one-year period.

Over the years, Trinity has received $12,000 in discounted software from College Board, and, in return, named College Board as a preferred lender. This is important because nationally, preferred lenders typically receive up to 90 percent of student loans. "The arrangement had not been disclosed to student borrowers and potentially violated consumer protection laws," Attorney General Richard Blumenthal said. "This code of conduct assures that students have access to the best available deal, unclouded and uncompromised by other interests." Kathleen Boelhouwer, Vice President for Alumni Relations and Communications at Trinity, added, "Their primary objective has been to make sure that families get the best rates with terms and service levels that meet the needs of each family.  The Code should provide peace of mind to families that their best interests are the sole basis for campus/lender arrangements."

Trinity has insisted there was no reason to inform parents or students of its arrangements with College Board. Professor of Economics Ward Curran said, "My inclination would not be to inform parents as the College was not trying to make parents select the College Board as a lender. Consequently, there was no reason to inform." Additionally, Boelhouwer has assured that students and parents are under no pressure to choose a preferred lender. "The decision to select a loan vendor is made exclusively and voluntarily by students and parents and there is no pressure to select a particular vendor." The Attorney General, however, has found that the discount may have constituted a violation of existing law, and the College has requested that the College Board amends its contract with Trinity.

"The findings of the Attorney General's office affirm the fact that Connecticut colleges and universities have been acting in the best interests of their students and the Code will help articulate a common set of policies and practices for state institutions to adopt," said Boelhouwer, explaining that there was no wrong-doing involved with Trinity.

In light of the AG's investigation, Trinity has added $12,000 into the Merin Hartford Scholars Fund. Boelhouwer said, "[The Merin Hartford Scholars Fund] is meant as a commitment to ensure the integrity of the financial aid process and open access to financing for higher education."

Trinity's decision has received favorable reception from observers. Department of Consumer Protection Commissioner Jerry Farrell, Jr. said, "I commend these three schools -- and others -- for committing to prohibit questionable compensation from lenders to universities, and demand disclosure to students and parents about criteria used to select 'preferred lenders'. I thank these schools for their cooperation during our investigation."

Other institutions involved in the investigation, such as Fairfield University, have received personal benefits from lenders.

Investigators found that another student lending company paid for a trip to Amelia Island, Fla., for Fairfield's financial aid director to discuss student loan issues. However, Trinity officials have maintained that no such personal benefits have occurred. "No one on our staff benefited personally from any relationships with a preferred lender. One of our loan officers received pizza and a soft drink at a noontime conference hosted by one of the preferred lenders," said Boelhouwer.

Even though Trinity received software discounts in exchange for naming College Board as a preferred lender, Trinity still selected College Board as a preferred lender on legitimate grounds, claim administrators. Boelhouwer said, "College identifies preferred lenders in order to evaluate carefully their loan practices and standards and identify for our students and their families those we believe offer the best benefits to borrowers."

Some at Trinity College, however, have disagreed with the Attorney General's suggestions and the formation of a new financial aid code of conduct. "The College Board's rates were competitive and the discount was not a factor in its selection," said Curran. "In my judgment, the ethics of any discount to a college hinges on whether the officials of that institution pocketed the discount or put it into its budget. Clearly, it is the latter and not the former that was the case here." Curran said, "Some might benefit from a refresher course in the principles of economics taught in our evening program, thereby learning something about how markets function as well as the imperfections in the human capital market. These imperfections are what financial aid addresses."

Several students agree with Curran's sentiment. Christian Montoya Para '09 said, "The financial aid office has never suggested that I seek out a loan from College Board. As long as their dealings with College Board don't affect the amount of financial aid students get, Trinity college is entitled to do what it feels like."

Curran continued, stating that what College Board and Trinity College did was just business. "If the terms are better from a lender on the list, including College Board, business will come to that lender," he said. Curran also suggested that the Attorney General could have sensationalized the situation. He said, "Under the principles of public choice, bureaucracies including the office of Attorney General seek publicity which in turn may enhance their fiscal allocation from the legislature. When they cannot find anything sensational, they look for something to justify the time spent. I suspect, but do not know, that is what happened in this instance."

Article Tools