SENATOR EDWARD M. KENNEDY RELEASES REPORT ON STUDENT LOAN SYSTEM
WASHINGTON, D.C.--Today, Senator Edward M. Kennedy, Chairman of the United StatesSenate Health, Education, Labor and Pensions (HELP) Committee, released a report on thestudent loan system entitled “Report on Marketing Practices in the Federal Family EducationLoan Program." The report discusses the findings of Chairman Kennedy's investigation ofinappropriate marketing practices in the student loan industry.
Chairman Kennedy said, “This investigative report demonstrates that inappropriate marketingpractices, conflicts of interest, and back-room deals are found all too frequently in the studentloan industry. The findings underscore the urgent need for systemic reform in the studentloan system. Focus and attention must be paid to America's students who need accurate,unbiased information when making one of the most important decisions of their lives."Key findings of the report include:
• Some FFEL lenders provided compensation to schools with the expectation, and in somecases an explicit agreement, that the school will give the lenders preferential treatment,including placement on the school’s preferred lender list.
• Other FFEL lenders spent large sums on travel and accommodation expenses for meetingsof Advisory Boards comprised of school officials, and often expected these benefits to yieldincreased loan volume, or other preferential treatment, at Board members’ schools.
• School officials held financial interests, including stock and options to purchase stock, inFFEL lenders which are on the preferred lender list or are otherwise recommended to students.• School officials received payments for consulting and other services from FFEL lenderswhich are on the preferred lender list or are otherwise recommended to students.
The report is part of Chairman Kennedy's ongoing investigation into the student loan system.Next week, the HELP Committee will consider legislative solutions to problems within thestudent loan system.
The report and supporting documentation is available at www.kennedy.senate.gov.
Laura Burton Capps/ Melissa Wagoner (202) 224-2633