I work at loan to learn and I’d like to clarify a few things related to Attorney General Cuomo’s announcement and this blog post.  It’s certainly true that our conference in Pebble Beach was attended by thought leaders, college administrators, policy leaders and, yes, a handful of financial aid officers -- all of whom have a stake in the future of higher education and such issues as rising college costs, how best to target federal programs to the neediest students, and how to maintain U.S. competitiveness in an increasingly global economy.

However, our conference was NOT about marketing our Loan to Learn product to financial aid offices – given the way we work, that claim makes no sense. We are not involved in the government's loan programs and have never been in the "school channel" that involves the financial aid offices. We are not "preferred lenders," because we have never entered into any special arrangements with any school. Financial aid offices are not our customers, students and their families are.

Representatives of Loan to Learn and Educap have been trying to reach out for some time now to The New America Foundation to share the facts about our company.  We’ve tried not to start a flame war on this blog.  We are disappointed that you would choose to repeat misleading statements about one conference we sponsored and a second conference that never took place – especially since we haven’t even had a chance to state our case directly to the writers of this blog.  It’s unfortunate because there are so many true, identifiable abuses in the education finance system that should be exposed.

We continue to support Attorney General Cuomo's efforts to expose the "problematic" practices of preferred lender lists and other abuses engaged in by those participating in both the government and private lending markets.

 

George C. Pappas

Senior Vice President

Educap, Inc.

March 19, 2007
The Honorable Andrew M. Cuomo
Attorney General of the State of New York
The Capitol
Albany, NY 12224-0341

Dear Attorney General Cuomo:

I am president of the National Association of Student Financial Aid Administrators
(NASFAA), an organization representing postsecondary education financial aid
administrators at approximately 3,000 schools across the country. I am writing this letter to
you personally since we choose not to get into a dueling press release dispute with you and
your office that does not serve student loan consumers, your office’s interests, or
NASFAA’s interests in solving this public policy issue.

I know my members. They play by the rules. They are ethical. They don’t cut corners.
They don’t take bribes. They are even-handed in their dealings with students and families.
They provide students and parents with guidance through a complicated, complex maze of
student aid programs and procedures. They provide accurate and timely consumer
information and counseling. They make certain every student and family obtains the
maximum amount of student aid that they are eligible to receive. They ensure that myriad
statutory and regulatory requirements are met. And, they are good stewards of taxpayer
funds. I am proud of them and all the good work they accomplish for America’s citizens.

You have done them a great disservice and have dishonored their good names. What is
worse is that you have encouraged students and parents to mistrust the advice and
counseling of financial aid administrators and schools, which will only lead to bad
decision-making by consumers to their detriment.

Your recent letter to college presidents, press release, consumer brochure, and comments in
the media about student aid administrators make it clear that your office is unfamiliar with
the student aid process or the dedicated professionals staffing our financial aid offices. You
need to be aware of the following facts:

• The principal concern of financial aid administrators is to provide as much student aid
as is available from all sources of federal and state assistance, private scholarships
offered chiefly by colleges and civic groups, and student loans so that all students are
able to finance their education and that their student loan debt burden is kept as low as
possible.

• Institutions develop preferred lender lists to help families make informed decisions in
the face of thousands of competing lenders and loan products.

• Our members are aided in developing preferred lender lists by a set of guidelines
published by NASFAA and bound in their actions by NASFAA’s “Statement of Ethical
Principles.”

• Lender lists are a guide for borrowers. Schools use them as a tool to help families by
placing lenders on their list who offer consumers competitive loan terms and conditions
such as, no loan fees, lower interest rates, and loan repayment benefits. Listed lenders
not only must offer good loan terms and conditions, but also must provide superior
services, especially once repayment of the loan begins.

• Every school that I am aware of honors the statutory right of a borrower to choose the
lender they want even if that lender is not on their list. Further, the school will
promptly certify any loan from any lender. They do this not only because it is the law,
but because aid administrators believe consumers have the right to make their own
financial decisions since borrowing a student loan is their financial obligation.

• Financial aid administrators are extremely hard-working, devoted individuals who must
diligently administer complex federal and state assistance programs, making certain that
they adhere to numerous and extremely complicated statutory and regulatory
obligations.

Student financial aid administrators can take justifiable pride in their commitment to
service to students and their families and they spend countless hours beyond their regular
work hours presenting high school students and their families with information about
financial aid. Using the financial resources that are made available by the federal
government, states, their own institutional funds, and private sources, NASFAA’s members
ensure that students and their families are able to finance a postsecondary education. And
that is not an easy task.

The rhetoric used in the releases from your office as well as your quotes in the media
appear designed to inflame rather than to inform, and to exaggerate rather than illuminate.
Although the language of your office’s printed materials is very carefully crafted to remain
just inside the bounds of libel, I strenuously object to the use of qualifying language when it
is used as a subterfuge to bring public contempt to a profession that serves the public so
well. I expect a prompt and public apology from you for your unwarranted character
assassination of public servants who only want to do what is best for their students and their
families.

I feel it is my responsibility to convey to you the reaction of my members to your
statements. Many of our members, from New York and nationwide, believe you have
insulted not only our profession, but also each individual financial aid administrator who is
a devoted professional. Many believe that your office has engaged in nothing short of
character assassination; and I agree with them.

Worst of all, because they care passionately about their professional responsibilities to
provide help to their students, they believe you have torn the fabric of trust between
schools, parents and students, and high school guidance counselors which will lead to
unfortunate consequences for families, not only by causing increased confusion and
unnecessary confrontation, but by leading borrowers to make financial mistakes as they are
lured by slick lender marketing techniques.

I agree with you that any preferred lender list abuses and genuine conflicts of interest
should end, and that it would serve the public interest to have greater transparency in how
and why a school uses a lender list. Again, I must emphasize that from my experiences
such abuses are rare. However, I believe that one abuse is inexcusable if it causes
disadvantage to even one student. I know that the members of our profession agree with
me. Aid administrators not only do not condone, but would be the first to censure
colleagues who cross the line into questionable behavior.

However, while I can’t prove it my suspicion is that some of the information provided to
your office comes from lenders and others who have an ax to grind because their loan
products and services--which they claim are superior to other lenders but may not be--have
not warranted a place on most schools’ preferred lender lists. So, it is their interest to
discredit financial aid administrators and schools and other lenders.

I have no doubt that when your office completes its investigation you will find only a very
few bad apples among schools, and you will recognize that nearly every aid administrator
and school is extremely ethical. Undoubtedly, you will find some areas that need
improvement. I agree we can always do better. But, you also will discover that aid
administrators desire only to serve their students best interests and they are honorable.

Mr. Cuomo, I invite you to personally talk with the financial aid administrators in New
York, as well as the around the nation. Give them a fair hearing, rather than listening to
distortions and hearsay. You will find dedicated professionals whose primary concern is to
their student aid recipients. They take their stewardship responsibilities for taxpayer dollars
very seriously. They equally care about meeting the needs of their students so that they
may finance their postsecondary education and graduate to be productive citizens.

Since you and I agree that some reforms are necessary to correct what I believe are a very
small number of abuses, I would be pleased to personally discuss the matter of preferred
lender lists with you at your earliest convenience.

Sincerely,
Dallas Martin
President

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