New Government Report on the Student-loan Industry

From the Executive Summary:

This report was prepared by the Chairman’s Staff of the Senate Health, Education, Labor
and Pensions Committee (“Committee”) and is the second report setting forth the
findings of an investigation into marketing practices in the Federal Family Education
Loan program (“FFEL”). The report addresses a discrete set of marketing practices,
some of which were addressed in the first report and others which are newly examined
here:

• Some lenders provided donations, services, private loan funds, and other
  benefits to colleges in exchange for preferential treatment with regard to
  student loans, including placement on the college’s preferred lender list;
• Some lenders made improper payments to schools, based on loan volume,
  and gained preferential treatment for FFEL loans in exchange for such
  payments;
• Two lenders entered into an improper agreement with a guaranty agency
  under which (1) the lenders paid the guaranty agency a marketing fee which
  violated the inducements prohibition and (2) the guaranty agency provided
  free personnel to schools in exchange for FFEL market share;
• Some lenders, schools and alumni associations entered into agreements that
  improperly constrained financial aid officers from providing unbiased and
  neutral financial advice to students.

See also, Kennedy outlines more apparent conflicts in new report on student-loan industry, The Chronicle (for subscribers)   [RJ]