University Of Missouri System Adopts Code Of Conduct To Help Protect Students With Loans

October 22, 2007 -- Jefferson City, Mo. — The University of Missouri system, the state’s largest university system with 64,000 undergraduate and graduate students on four campuses, has adopted a code of conduct in an agreement with Missouri Attorney General Jay Nixon regarding its relationship with the student loan industry. The interim President of the University, Dr. Gordon H. Lamb, today issued an executive order to adopt the code of conduct, which Nixon said will help current and future University of Missouri students and their families by ensuring they have adequate information and protection when choosing a lender.

“Having the University of Missouri system adopt a code of conduct has been one of my primary goals ever since we began looking into student loan practices at the beginning of this year,” Nixon said. “As an undergraduate and law school alumnus of the University of Missouri, I am very pleased President Lamb approved this agreement, which will continue to serve generations of future students and their families.”

The agreement, the latest obtained by Nixon from the state’s institutions of higher education, covers the University of Missouri-Columbia, the University of Missouri-Rolla, the University of Missouri-Kansas City, and the University of Missouri-St. Louis. Nixon also announced today that his office has entered into a code of conduct agreement with Jefferson College, a two-year college located in Hillsboro. To date, 26 Missouri universities and colleges representing almost 170,000 students have reached such agreements with Nixon’s office.

“As they consider lending options that best fit their situations, students and their families need to make those borrowing decisions with sufficient and appropriate information,” Nixon said. “The loan process can be intimidating, especially in preparing for the first year. These colleges and universities are doing a valuable service for current and future students and those students’ families.”

Since the beginning of the year, Nixon and other Attorneys General across the country have been looking into student loan lenders and their relationships with higher education institutions. Nixon has expressed concern about, among other things, students being steered by universities to “preferred lenders” without the students and their families receiving information about how those lists were compiled; revenue-sharing arrangements that reward institutions of higher education that put lenders on such lists; and gifts being given by lenders to institutions of higher education or their employees.

The codes of conduct include:

* A prohibition on certain remuneration to the schools, specifically through revenue-sharing agreements, and a prohibition on remuneration to school employees.
* Required disclosures related to preferred lending lists. The school would be required to adequately inform students and their parents of the school’s decisions regarding its preferred lender list.
* A prohibition on steering students to certain lenders’ master promissory notes (MPNs). Students are often provided MPNs in paper or electronic form. The Code of Conduct will ensure that the lender box on the MPN is not pre-selected, so the student has the opportunity to enter his or her own choice.
* A limitation on school employees’ participation on lender advisory boards in exchange for compensation or reimbursement of any expense.

Source: Missouri Attorney General