With college costs on the rise and new questionable practices in the student loan industry recently revealed, the United States Senate Health, Education, Labor and Pensions Committee passed the Higher Education Access Act of 2007 and the Higher Education Amendments of 2007 on June 20.

The bill, which is expected to reach the Senate floor in July, will help to make college more affordable, ensure that financial aid officers do not exploit the student loan system and simplify the Free Application for Federal Financial Aid, according to a prepared statement from Senator Edward M. Kennedy, chairman of the HELP Committee.

“These bi-partisan bills introduced by the committee signal to students that their futures are our top priority,” said Kennedy in the statement.

Included in the bill is the Student Loan Sunshine Act which, if passed, will make the dealings of universities and private lenders more transparent to the public. The act would ban lenders from offering gifts or services to university employees worth more than $10 and would require full disclosure of special arrangements between the two parties.

A 50-page report released by Kennedy on June 14 revealed that school officials accepted personal gifts and favors from private loan institutions in exchange for implied, if not explicit, preferential treatment.

Blurring the lines with conflicts of interest, school officials across the nation have accepted gifts, favors and benefits from lenders, according to the report.

“I think that transparency of relationships is very important and the college officials should not have conflicts of interest when offering financial aid advice to students,” said Dr. Paul Lingenfelter, president of State Higher Education Executive Officers.

Perhaps one of the most publicized cases is that of Dr. Lawrence Burt, former director of the University of Texas at Austin Office of Student Financial Services. According to the report, Lawrence placed lenders on the preferred lenders list not necessarily due to the competitiveness of the lender’s loan terms but instead based on the benefits provided to the staff.

The list of benefits provided to school officials by lenders has included vacations, extravagant meals, family birthday parties and stock options. Although there is little public denial that such practices are unethical, if not illegal, some say that the direct effect on students has been minimal.

“My guess is that the effect on the individual students would be very small and in some cases they might have actually gotten the better deal by going in the direction they were steered by these practices, but that’s not the point,” said Lingenfelter. “The point is that the institution or the individuals had a private side deal that affected the way they were giving advice or presenting information that the customer had every reason to believe was impartial or objective. The fact that there was this subtle steering going on the side was very inappropriate.”

Announcing a settlement June 14 with Johns Hopkins University for similar improper transactions, New York State Attorney General Andrew M. Cuomo has championed the cause, bringing a total of 26 schools to commit to a code of conduct, according to a prepared statement from the attorney general’s office.

According to CSUN Interim Director of Financial Aid Lili Vidal, no officials at CSUN have been involved in any such improper conduct.

Outlining the practices that the university officials can and cannot engage in, the CSU will undergo changes specific to the lender list, according to Vidal. The changes will include narrowing the lenders on the list to three, rather than the current 11, and no longer allowing for the university to accept refreshments or meals from lenders for training events.

Although there is a good deal of pressure on schools to eliminate the preferred lenders list, Vidal said CSUN will continue to have a preferred lenders list in order to cut down on research and work students would otherwise have to do on their own.

The criteria the school looks for in a preferred lender includes lender’s longevity in the loan business, financial stability, customer service, and borrower’s benefits. After a lender is placed on the list, there are no background deals or agreements, said Vidal.

Vidal said that the benefits of the Student Loan Sunshine Act may be both positive and negative for the students.

“I think it’s positive for students as far as them learning what [the financial aid office] does and why we do it. Also, it will force students into doing more work for themselves as far as investigating,” said Vidal. However, she also said that this will mean less selection offered to the students and that lenders will bypass the schools, marketing directly to students.

The chancellor’s office and the California Attorney General’s office have conducted several investigations into the financial aid department at CSUN to ensure that the university has not exploited its relationships with lenders and students, according to Vidal. There were no findings of improper conduct at CSUN, said Vidal.

“It is distressing to have people think negatively about you when you’ve sacrificed a lot trying to make life better for other people but I think it’s good that they are looking at providing a more ethical, environment,” Vidal said. “There were bad decisions and bad judgments made by some aid directors. No matter what profession you look at, you are going to find people doing the wrong things.”