From Anger to Acceptance

At various points in the months-long student loan controversy, college financial aid directors, having seen their public image tarnished by the actions of some of their peers, have responded by exhibiting most of the stages of grief -- notably anger and denial.

But to judge from an opening session Sunday at the annual meeting of the National Association of Student Financial Aid Administrators, it seems as if student aid officers might be slowly accepting the idea that as the rules change, their behavior must, too.

Sunday’s session offered rank and file financial aid administrators their first formal chance to respond to the new code of conduct that their national association has developed to govern their behavior in the delicate and important role they play as third-party intermediaries between lenders and students.

Their conduct in that role has been questioned by members of Congress and New York Attorney General Andrew Cuomo, whose investigations into lender-college relationships have uncovered serious wrongdoing (acceptance of direct payments or stock from lenders) by a relative few individual financial aid officers and perceived or at least potential conflicts of interest by a larger number of colleges. (A member of Cuomo's staff was listening in the audience, unannounced, at Sunday's session, another provision of the agreement that Cuomo's office and NASFAA reached in May in which the association unveiled its new code of conduct. Under that agreement, NASFAA severely restricted the visibility and involvement of lenders at its annual meeting, and as the conference got under way Sunday, the changes were aplenty, some more noticeable than others. For example, there were no buses carting groups of financial aid officers off to events in the evening, as has been common practice in the past. Less obviously, the tote bags given to attendees had a logo of the financial aid association plastered over what had originally been the name of a lender.)

After responding slowly and defensively to the cascading series of allegations and revelations as the scandal emerged, NASFAA, as the national student aid group is known, announced in May a new code of conduct that some financial aid officials have complained would go too far in barring practices that they do not believe to be wrong, like accepting travel reimbursement from lenders for travel to advisory board meetings educational programs, for instance.

The code's six basic requirements would insist that aid officers:

• Refrain from taking any action for personal benefit.
• Refrain from taking any action that he or she believes is contrary to law, regulation or the best interests of students and parents.
• Ensure that the information he or she provides is accurate, unbiased and does not reflect any preference resulting from actual or potential personal gain.
• Be objective in making decisions and advising his or her institution regarding relationships with any entity involved in any aspect of student financial aid.
• Refrain from soliciting or accepting anything of other than nominal value from any entity (other than an institution of higher education or a governmental entity such as the U.S. Department of Education) involved in the making, holding, consolidating or processing of any student loans, including anything of value (including reimbursement of expenses) for serving on an advisory body or as part of a training activity of or sponsored by any such entity.
• Disclose to his or her institution, in such manner as his or her institution may prescribe, any involvement with or interest in any entity involved in any aspect of student financial aid.

Given the intense chatter on listservs for financial aid officers and other public and private grumbling about the proposals from NASFAA and Congressional lawmakers in recent weeks, it was a solid bet that Sunday’s session -- at which two longtime Washington lawyers who helped the association draft the new code were prepared to explain and defend it -- would be contentious.

Michael B. Goldstein, who heads the higher education practice at the Washington firm of Dow Lohnes, seemed to anticipate a rough reaction, beginning by establishing his own credentials as having worked with student aid administrators for 40 years and acknowledging the unhappiness that campus officials have expressed.

"This is all pretty stringent," Goldstein said of the code, noting that he had been asked repeatedly in recent weeks, "Why are we being put under such a set of restrictions and limitations? We're good people, working for parents and students and institutions. Why do we have to do this?"

Goldstein offered two answers to his own question. First, he argued, very little in the code would represent a change in the practices for most campus financial aid offices, because "with the exception of the issue of reimbursement of expenses, you're already doing it."

Second, he said, "we need to make clear to the public that we hear the noise. We hear the concern. We hear the outcry, and as a profession, we are responding to it."

Sheldon E. Steinbach, who joined Dow Lohnes after many years as vice president and general counsel at the American Council on Education, said he understood it was frustrating for financial aid officers that "some of the practices in the student loan industry that were considered to be acceptable have morphed into activities that are seen as ethically unacceptable or in some cases illegal."

But painful as it has been for politicians, newspaper articles and commentators to paint with a broad brush in condemning the behavior of campus financial aid officials, Steinbach told the group, "you can now all be in a position of standing tall, having a code you can point to. It reassures the press, to the extent the press can ever be reassured. It responds to the concerns of parents and students that there's some kind of hanky panky going on that our institutions are complicit in."

Goldstein and Steinbach may have girded for complaints from the rank and file aid officers, but the criticism never came. It's quite likely that is because financial aid officials have come to see that, as the lawyers argued, there was no choice, that a bold public statement of their principles is necessary to win back public confidence in their behavior. (It is also possible, as some financial aid officials speculated after the session, that aid administrators are "just tired of the whole thing," as one put it, and "just want to be told what they need to do at this point.")

They didn't come with complaints and criticism, but attendees of Sunday's session had plenty of questions, though: Why do reporters never write articles about how many financial aid officers follow the rules? Should state associations of financial aid directors continue to accept sponsorship and other funds from lenders? Should campuses continue to cooperate with requests from state attorneys for information about their student loan practices? Are preferred lender lists likely to be prohibited altogether in the future, or whether colleges' use of them will merely be restricted?

Goldstein and Steinbach said repeatedly that the code of conduct is a "work in progress" because so many balls are still in the air, with Congress still working on various pieces of legislation that would put in place restrictions on lender-college relationships, with the outcome uncertain.

One thing is virtually certain, Goldstein said in response to a question about what practices a campus aid official should follow if he or she is faced not only with the code from NASFAA, but also a code promulgated by his or her state attorney general (based on state consumer protection law) and whatever eventually emerges from Congress: "The answer is your hand is going to get tired signing documents."

Financial aid officials should not be afraid of the scrutiny, and should actually welcome it, Goldstein said, because "most of them couldn't have the slightest aspersion cast on them."

"That's why the code of conduct is important," he said. "It says, 'We get it, we've been doing it right, and we will continue to do it.' "