Financial Aid Code of Conduct
Drexel University is committed to providing to our students and their families all relevant information about financial aid to help them make informed choices that are best for them. For that reason, all information provided by Drexel University in this process shall be evaluated and determined solely by considering the best interests of our students and their families, and provided without any interest in or compensation or other benefit to Drexel.
Drexel University has long had a Code of Conduct (Policy OGC-5) that requires the disclosure of any possible conflict of interest, recusal from decision making wherever there is a personal interest, and prohibition on receiving compensation from third parties for work performed for the University. The University also adopted a Code of Conduct specifically for matters affecting financial aid in 2006, which applied to everyone who was in any way involved in the financial aid process, including Trustees. The federal Higher Education Opportunity Act ("HEOA") signed into law in August 2008, requires, among other things, that institutions of higher education participating in a federal student loan program develop, publish, administer, and enforce a code of conduct with respect to financial aid and student loans. This Code of Conduct reiterates and reflects the University's continuing commitment to conducting financial aid practices with integrity, free from real or perceived conflicts of interest, in the interest of students and their families, and in compliance with applicable law.
- "Gift" shall mean any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. A gift also includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance (or reimbursement after an expense has been incurred). The following items are specifically exempt from the definition of "gift":
- Standard material, activities, or programs on issues related to a loan, default aversion, default prevention, or financial literacy, such as a brochure, a workshop, or training.
- Favorable terms, conditions, and borrower benefits on an education loan provided to a student employed by the University if those terms, conditions, or benefits are comparable to those provided to all students at the University.
- Entrance and exit counseling services provided to borrowers, as long as University staff is in control of the counseling (whether in person or via electronic capabilities), and the counseling does not promote the products or services of any specific Lending Institution (as hereinafter defined).
- Philanthropic contributions to the University from a lender, servicer, or guarantor or servicer of education loans that are unrelated to education loans, or any contribution from a Lending Institution that is not made in exchange for any advantage related to education loans.
- State education grants, scholarships, or financial aid funds administered by or on behalf of a State.
- "Lender" shall mean any entity that itself or through an affiliate engages in the business of making loans to students, parents, or others for purposes of financing higher education expenses or that securitizes such loans.
- "Lending Institution" shall mean (i) Any entity that itself or through an affiliate engages in the business of making loans to students, parents, or others for purposes of financing higher education expenses or that securitizes such loans; or (ii) Any entity, or association of entities, that guarantees or services education loans; or (iii) Any industry, trade, or professional association that receives money from any entity described above in subsections (i) and (ii).
- "Opportunity Loans" shall mean loans made pursuant to any agreement, understanding, or practice in which a Lending Institution applies more lenient loan underwriting criteria than it otherwise would to a certain class of loan applicants.
- "Preferred Lender List" shall mean a list of preferred or recommended Lending Institutions or similar ranking or designation. A Lending Institution included on such a list is referred to as a "Preferred Lender."
- "Revenue Sharing Arrangement" is an arrangement whereby an educational institution recommends a Lending Institution and the Lending Institution pays a fee or provides other material benefits, including revenue or profit-sharing, to the institution, or to an officer, employee, or agent of the institution.
II. Code of Conduct
A. Prohibition of Gifts and Certain Remuneration
- No University officer, trustee, director, employee, or agent shall accept a gift or anything of more than nominal value on his or her own behalf or on behalf of another from or on behalf of a Lending Institution, including, without limitation, the payment or reimbursement by a Lending Institution of expenses in connection with lodging, meals, or travel to conferences or training seminars.
- This prohibition shall extend to gifts to family members of University officers, trustees, directors, employees, and agents when the gift was given with the knowledge and acquiescence of the officer, trustee, director, employee, or agent and the officer, trustee, director, employee, or agent has reason to believe the gift was given because of the official position of the officer, trustee, director, employee, or agent.
- Nothing in this Code shall be construed to prohibit any University officer, trustee, director, employee, or agent from:
a. Conducting non-University business with any Lending Institution. b. Holding membership in any nonprofit professional association. Reimbursement for reasonable expenses related to the membership in such nonprofit professional associations shall be permitted in accordance with University policy. c. Serving on an advisory board, commission, or group established by a Lending Institution, or group of Lending Institutions, provided that: (i) anyone employed in the financial aid office of the University is prohibited from any participation on an advisory board, commission, or group established by a Lender or group of Lenders, and (ii) any trustee, director, employee, or agent of the University who otherwise has responsibilities with respect to education loans or other student financial aid of the University, shall be prohibited from receiving anything of value (including but not limited to any remuneration, or reimbursement of expenses, for serving in such capacity) from the Lending Institution, or group of Lending Institutions. Disclosure and participation on such an advisory board by a trustee, director, employee, or agent of the University shall be in accordance with the University's Conflict of Interest policy.
B. Limitations on University Personnel Participating in Contracting Arrangements
No University officer or employee of the University's financial aid office (or employee or agent who otherwise has responsibilities with respect to education loans) may (1) accept from a Lender any fee, payment, or other financial benefit as compensation for any type of consulting arrangement or contract to provide services to or on behalf of a Lender relating to education loans; or (2) enter into any type of consulting arrangement or contract to provide services, whether paid or unpaid, if doing so would create a conflict of interest or the appearance of a conflict of interest as determined by the University's Chief Compliance Officer.
C. Prohibition of Revenue-Sharing Arrangements
The University will not enter into Revenue-Sharing Arrangements with any Lending Institution.
D. Preferred Lender Lists
In the event that the University promulgates a Preferred Lender List, the University shall:
- Prominently disclose the method and criteria used by the University to select the Lenders on the Preferred Lender List, and the relative importance of those criteria and ensure that such Lenders are selected on the basis of the best interest of borrowers;
- Exercise a duty of care and a duty of loyalty in compiling the Preferred Lender List for the sole benefit of students attending the University, and the families of such students;
- Clearly and fully disclose the reasons why the University entered into an agreement with each Lender on the Preferred Lender List, including the terms, conditions, or provisions favorable to the borrower;
- Clearly and fully disclose that students attending the University and the families of such students do not have to borrow from a Lender on the Preferred Lender List and that students will suffer no penalty for choosing a Lender that is not on the list;
- Ensure that the University does not assign any first-time borrower's education loans, through award packaging or other methods, to a particular Lender;
- Ensure that the University does not deny or otherwise impede a borrower's choice of a Lender, or cause unnecessary delay in loan certification for borrowers who choose a Lender that is not included on the Preferred Lender list;
- Ensure that the University does not deny or otherwise impede a borrower's choice of a guaranty agency, or cause unnecessary delay in loan certification for borrowers who choose a specific guaranty agency;
- Ensure that the constitution of any Preferred Lender List shall be reviewed no less than annually;
- Ensure that no Lender shall be placed on any Preferred Lender List unless the Lender provides assurance to the University and to student and parent borrowers who take out loans from said Lender that the advertised benefits upon repayment will continue to inure to the benefit of student and parent borrowers regardless of whether the Lender's loans are sold;
- Ensure that no Lender that, to the University's knowledge after reasonable inquiry, has an agreement to sell its loans to another unaffiliated Lender shall be included on any Preferred Lender List unless such agreement is disclosed therein;
- Maintain for a period of ten (10) years all relevant and material records documenting the criteria and process used in compiling the Preferred Lender List.
E. University Relationship with Lenders and Lending Institutions
- The University shall ensure that employees of Lending Institutions and their agents always make clear to students and their families that they are not employed by, or agents of, the University. No employee or other agent of a Lending Institution may ever be identified to students or prospective students of the University or their parents as an employee of the University. All materials, whether written or electronic, provided to students and their families shall be consistent with the requirements of this Code of Conduct.
- No employee or other agent of a Lending Institution shall be permitted to staff the University financial aid office at any time. The University will not request or accept from any Lender any assistance with call center staffing.
- Nothing in this provision shall prevent the University from requesting or accepting certain types of assistance as allowable in the HEOA, including:
a. professional development training for financial aid administrators; b. the provision of educational counseling, financial literacy, or debt management materials for borrowers, provided that such materials disclose to borrowers the identification of any Lending Institution that assisted in preparing or providing the materials.
F. Proper Execution of Master Promissory Notes
The University shall not condition, link, or otherwise direct potential borrowers to any electronic Master Promissory Notes or other loan agreements that do not provide a reasonable and convenient alternative for the borrower to complete a Master Promissory Note with any federally approved Lending Institution offering the relevant loan.
G. School as Lender
If the University participates in the "School as Lender" program under 20 U.S.C. § 1085(d)(1)(E), or any successor provision, the University shall be deemed a "Lending Institution" under this Code and be subject to all of the conditions set forth herein.
H. Opportunity Loans
The University may enter into arrangements with Lenders to provide Opportunity Loans to students whose credit rating would otherwise preclude them from obtaining loans with reasonable rates and terms, provided, however, that the University shall not enter into any arrangement with a Lender to provide Opportunity Loans if the University's participation in such arrangement disadvantages any other borrower.