SFA Home / Policies

Financial Aid Code of Conduct (D-53)

Original Implementation:April 21, 2009
Last Revision: January 31, 2012

This Code of Conduct is promulgated under the Higher Education Act § 487(a)(25), as reauthorized and amended by the Higher Education Opportunity Act, and is not intended to conflict with any Texas law involving conflict of interest and/or ethics, specifically Texas Government Code § 572.051. This Code of Conduct helps to ensure that such laws are not violated; the Code is consistent with Stephen F. Austin State University Ethics policy (E-56). To help ensure public confidence in the financial aid system and to promote high ethical standards, provisions in this Code of Conduct may exceed the minimum limits required by law.

  1. Definitions
    1. “Lending institution” or “lender” shall mean: (i) any entity that itself, or through an affiliate, engages in the business of making loans to students, parents or others for purposes of financing higher education expenses, or that securitizes such loans; or (ii) any entity, or association of entities, that guarantees education loans. “Lending institution” or “lender” shall not include the university or the state or federal government. The Texas Guaranteed Student Loan Corporation is exempt from this definition.

    2. “University” shall mean Stephen F. Austin State University and those entities that subscribe to their policies and this Code of Conduct.

    3. “Compensation” shall mean anything of value, including but not limited to money, credits, loans, discounts, payments, fees, forgiveness of principal or interest, reimbursement of expenses, charitable contributions, stock options, consulting fees, educational grants, vacations, prizes, gifts, or other items of value, whether given directly or indirectly.

    4. “Trade association” shall mean any higher education, financial aid, lending or banking trade, industry, or professional association that receives compensation within the preceding 12-month period from any lending institution or lender.

    5. “Outside director” shall mean a member of a lender’s board of directors or board of trustees who receives compensation from such lender in connection with his or her service on the board of directors or board of trustees and who receives no other compensation from the lender as an officer, employee, or agent of the lender or otherwise.

    6. “Agent” shall mean a person acting as a representative of and at the direction of or under the control of a university, where such person’s responsibilities with respect to the university relate primarily to the university’s activities involving financial aid or the business of higher education loans.

  2. Code of Conduct
    1. Prohibition of Certain Compensation to University Employees

      1. No university trustee, director, officer, or agent, or any employee who is employed in the financial aid office of the university or who otherwise has responsibilities with respect to higher educational loans or other financial aid at the university, and no spouse or dependent children of any such persons (“family member”), shall accept any compensation of more than nominal value (not to exceed $20), directly or indirectly, during any 12-month period, from or on behalf of a lending institution or trade association, except that this provision shall not be construed to prohibit any officer, trustee, director, agent or employee of the university, or any of their family members, from receiving compensation for the conduct of non-university business with any lending institution or trade association or from accepting compensation that is offered to the general public.

      2. Notwithstanding the prohibitions in subsection II.A.1 or any other provision of this Code of Conduct: (a) the university may hold membership in any nonprofit professional association; and (b) a university trustee, director, officer, or employee who is not employed in the financial aid office of the university and does not have responsibilities with respect to higher education loans or financial aid, may serve as an outside director of a lending institution or trade association and receive compensation at the lending institution’s or trade association’s established compensation rates for outside directors, provided that any university trustee, director, officer or employee serving on the board of the lending institution or trade association is precluded from participating in such board’s discussions or decisions that might affect the interests of the university and provided further that such university trustee, director, officer or employee complies with the university’s policy on Ethics (E-56), and receives annual written notice of the requirements of both this Code of Conduct and the university’s conflict of interest policy. Further, notwithstanding the prohibitions in subsection II.A.1, a trustee, director, officer or employee of a lending institution or trade association who does not have responsibilities with respect to higher education loans or financial aid shall not be prevented from serving on the board of directors of a university solely by virtue of his or her position with the lending institution or trade association, provided that any such person serving on the board of the university is precluded from participating in such board’s discussions or decisions that might affect the interests of such lender or trade association or that relate to financial aid or higher education loans.

      3. The prohibitions set forth in subsection II.A shall include, but not be limited to, a ban on any payment or reimbursement by a lending institution or trade association to a university employee or family member for lodging, meals, or travel to conferences or training seminars unless such payment or reimbursement is related solely to non-university business. University employees whose duties relate to financial aid may accept food or refreshments of nominal value provided or paid for by a lender or trade association at a meeting, conference or seminar related to their professional development or training. University employees are not precluded from attending any educational or training program related to financial aid or higher education loans where no registration fee is charged to any attendee because of a lender’s or trade association’s sponsorship or support of the program, and provided that the registration fee is limited to covering the costs associated solely with the education or training component of the program.

    2. Limitations on University Employees Participating on Lender Advisory Boards


      Any person who is employed in the financial aid office of a covered educational institution, or who otherwise has responsibilities with respect to private education loans or other financial aid of the institution, and who serves on a lender advisory board, commission, or group established by a private educational lender or group of such lenders shall be prohibited from receiving anything of value from the private educational lender or group of lenders except reimbursement for reasonable expenses. An annual report will be provided to the Secretary of Education of any reasonable expenses paid. Each report shall include: the amount for each specific instance of reasonable expenses paid or provided; the name of the financial aid official, other employee, or agent to whom the expenses were paid or provided; the dates of the activity for which the expenses were paid or provided; and a brief description of the activity for which the expenses were paid or provided. Lenders can obtain advice and opinions of financial aid officials on financial aid products and services through trade associations, industry surveys, or other mechanisms that do not require service on lender advisory boards, and provided that any reimbursement for expenses is limited to reasonable expenses as defined for service on advisory boards. This provision shall not apply to participation on advisory boards that are unrelated in any way to financial aid or higher education loans. This paragraph does not apply to serving in the Texas Guaranteed Student Loan Corporation.

    3. Prohibition of Certain Compensation to the University

      1. Neither the university, nor any alumni association, booster club, foundation, athletic organization, social organization, academic organization, professional organization or other organization affiliated with the university (“affiliated organizations”), may accept any compensation from any lending institution or trade association in exchange for any advantage or consideration provided to the lending institution or trade association related to the lending institution’s or trade association’s financial aid or education loan activity. This prohibition shall include, but not be limited to: (i) revenue sharing by a lending institution or trade association with the university or affiliated organizations; (ii) the receipt by the university or affiliated organizations from any lending institution or trade association of any equipment or supplies, including without limitation, computer hardware and software, for which the university pays below-market prices; and (iii) printing costs or services, provided that a university or affiliated organizations shall not be prohibited from accepting a lender’s or trade association’s own standard printed brochures or informational material that does not contain the university’s logo or otherwise identify the university.

      2. Notwithstanding anything else in this subsection, the university may accept assistance comparable to the kinds of assistance provided by the Secretary of the U.S. Department of Education to schools under or in furtherance of the Federal Direct Loan Program.

      3. Nothing in this subsection shall prohibit a university from accepting endowment gifts, capital contributions, scholarship funding, or other financial support from a lender or trade association, as long as the university gives no competitive advantage or preferential treatment to the lender or trade association related to its education loan activity in exchange for such support.

    4. Preferred Lender Lists

      In the event that the university promulgates a list of preferred or recommended lenders or similar ranking or designation (“preferred lender list”), the following restrictions and provisions apply.

      1. Every brochure, web page, or other document that sets forth a preferred lender list must clearly disclose, textually or by clearly designated hyperlink, the process and criteria by which the university-selected lenders for said preferred lender list, including but not limited to the payment of origination fees, competitive interest rates or other terms, high-quality servicing, and additional benefits beyond the standard terms.

      2. Every brochure, web page, or other document that sets forth a preferred lender list or identifies any lender as being on said preferred lender list shall state in the same font and same manner as the predominant text on the document that students and their parents have the right and ability to select the education loan provider of their choice, are not required to use any of the lenders on said preferred lender list, and will suffer no penalty from the university for choosing a lender that is not on said preferred lender list.

      3. Every brochure, web page, or other document that sets forth a preferred lender list or identifies any lender as being on said preferred lender list shall state in the same font and same manner as the predominant text any affiliations between the lenders on the preferred lender list.

      4. The university’s selection of preferred lenders and the university’s decision as to where or how prominently on the list the lending institution’s name appears shall be based solely on the best interests of student and parent borrowers, using stated criteria that are limited to benefits provided to borrowers (such as competitive interest rates and repayment terms, quality of loan servicing, and whether loans will be sold), and the ability to work efficiently and effectively with the university to process loans, without regard to the pecuniary interest of the university or to any benefits provided by lending institutions to the university or any of the university’s officers, trustees, directors, agents or employees or their family members. The university’s selection of any preferred lender shall be limited to the types of loans for which that lender has been selected, based on the benefits to the borrower for those types of loans, and the university’s preferred lender list shall indicate the types of loans for which each lender has been selected as a preferred lender. Nothing in this provision is intended to restrict the university’s ability to exercise its discretion in making its own final judgment about which lenders best meet the university’s criteria and the needs of its student and parent borrowers.

      5. The university shall review its preferred lender list at least annually.

      6. The university shall require that all preferred lenders commit in writing to disclose to the borrower at the time a loan is issued: (a) whether the loan may be sold to another lender; (b) that the loan terms and benefits will not change if the loan is sold to another lender; and (c) that the loan benefits may change if the borrower chooses to consolidate his or her loans.

      7. The university shall ensure that any preferred lender list that it publishes to students contains no less than three (3) unaffiliated lending institutions for Federal Family Educational Loans (FFEL) and two (2) unaffiliated lending institutions for private loans.

    5. Prohibition of Lending Institutions’ Staffing of University Financial Aid Offices

      1. No employee or other agent of a lending institution may staff the university financial aid offices at any time. The university shall ensure that no employee or other representative of a lending institution is ever identified to students or prospective students of the university or their parents as an employee or agent of the university. The foregoing prohibitions notwithstanding, if the university believes that it would benefit students, the university may allow representatives of lenders to conduct informational sessions, such as exit interviews and presentations on loan payment and loan consolidation options, as long as: (a) student attendance is voluntary; (b) a university representative explains that other lenders may provide similar services; (c) the affiliation of the lender representative is disclosed at the start of the presentation; (d) the lender representative does not promote the products or services of any lender; and (e) the university takes reasonable steps to ensure compliance with the requirements of this paragraph.

      2. In the event that the university permits a lender to conduct information sessions or exit interviews as set forth in subsection E.1., the university must retain control of any interview or presentation offered by lenders. Control may be evidenced by: (a) a university employee attending such interview or presentation; (b) the university recording or videotaping the interview or presentation; or (c) with respect to an exit interview conducted electronically via the internet, the university creating or approving in advance the content of such electronic exit interview.

    6. Proper Execution of Master Promissory Notes

      The university shall not link or otherwise direct potential borrowers to any electronic master promissory note or other loan agreement unless the master promissory note or agreement allows borrowers to enter the lender code or name for any lender offering the relevant loan, or the university’s link to the electronic master promissory note or agreement informs borrowers of alternative means of entering into a master promissory note or agreement with any lender of the borrower’s choice. Any information the university provides to borrowers about completing a master promissory note or agreement with a preferred lender must provide the information required in subsections II.D.1 and II.D.2. This paragraph shall not apply to telephone conversations in which a student merely seeks assistance in completing the master promissory note and has already selected a lender.

    7. Revolving Door Prohibition

      1. In the event a university hires an employee who will be employed in the financial aid office of the university, or who otherwise will have responsibilities with respect to higher education loans or other financial aid and such employee was employed by a lender during the 12-month period prior to the date of hire by the university, such employee shall be prohibited from having any dealings or interactions with such lender on behalf of the university for a period of 12 months from the date such employee’s employment with the lender was terminated.

      2. In the event a lender hires an employee who was employed by the university during the 12-month period prior to the date of such employee’s hire by the lender, the university shall be prohibited from having any dealings or interactions with such employee that relate to financial aid or higher education loans for a period of 12 months from the date such employee’s employment with the university was terminated.

 


Cross Reference: Higher Education Opportunity Act, Pub. L. No. 110-315; Tex. Gov’t Code § 572.051; Ethics (E-56)

Responsible for Implementation: Provost and Vice President for Academic Affairs

Contact for Revision: Office of Financial Aid and General Counsel

Forms: None

Board Committee Assignment: Academic and Student Affairs Committee