N.J. bans financial ties between schools, lenders

Posted: September 05, 2007

TRENTON - Colleges and universities in New Jersey were barred yesterday from having financial relationships with student loan providers.

The order from Attorney General Anne Milgram comes four months after her office began issuing subpoenas to 65 schools and 17 loan providers after New York and other states started examining whether payments had been made to encourage schools to promote certain lenders.

"The key is to be sure that no student is steered to a so-called preferred lender simply because the college has a special deal with the lender," Milgram said. "What should be most important is that students get the best loan terms possible."

The policy prohibits schools from accepting anything of value from lending institutions, and prohibits lenders from paying or reimbursing college employees for lodging, meals or travel to conferences or training seminars related to loan programs.

In addition, school employees - including trustees - are prohibited from accepting anything of "more than nominal value" from a lender.

Lists of preferred lenders must not be created to impede a borrower's choice and must contain at least three unaffiliated lenders, the policy states.- AP

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