Financial aid office to cease revenue sharing practices

Under pressure from the New York attorney general, TCU plans to end its revenue sharing partnership with Education Finance Partners, a university administrator said Wednesday. Mike Scott, director of scholarships and financial aid, said he stands by the integrity of the revenue sharing program but understands the potential for abuse, and therefore, is willing to end the program at Attorney General Andrew Cuomo’s request.

In late March, Cuomo sent schools across the nation a code of conduct that outlines regulations for financial aid departments and their lending practices.

Scott said he has not yet signed the code of conduct but intends to in the near future.

The code of conduct prohibits revenue sharing, a system in which lending companies pay schools a percentage of the profit they receive when a student begins to pay back a loan.

An April 2 press release from the attorney general’s office referred to revenue sharing as a potential conflict of interest.

Scott said this is one of the only areas in which TCU will be affected by signing the code of conduct because the university is already in compliance with most of the other regulations proposed.

The code of conduct also requires schools to include strict disclosure standards for how lenders are chosen to be on preferred lender lists.

Scott said the financial aid department is working on a statement to include on their list of preferred lenders.

He said they have a rigorous selection process for preferred lenders including investigation into customer service practices, interest rates, buyer benefits and student approval rates.

Despite the recent publicity surrounding financial aid practices, Scott said he has not received any calls from concerned students or parents.

Lauren Jones, a junior supply chain management and marketing major, said the financial aid office was helpful when she was looking into applying for grants and loans.

Jones said the office let her choose what bank she wanted to use for her private loans, but when applying for federal loans, she only knew about the loans on TCU’s preferred list.

She said she didn’t ask how the banks were chosen to be on the preferred list but just assumed they had good relationships with TCU and its students. She said this seemed to be a common practice and it did not bother her.

Also under investigation by Cuomo’s office is EFP, one of TCU’s preferred lenders. In a March 22 press release from the attorney general’s office, Cuomo announced his intent to file suit against EFP for deceptive business practices.

A woman who answered the phone at the attorney general’s press office Wednesday said Cuomo plans to continue with the suit. The woman declined to give her name for attribution.

Scott said though TCU will no longer participate in revenue sharing with EFP, they are still on the preferred list of lenders and he considers them “if not the best, then at least one of the best loans out there.”

Overall, Scott said the investigation has given him a better understanding of the influence his decisions have on students. He said in the future, he intends to look for more student input to find out what they think is most important in financial aid decisions.