FN22 Policy on Institutional and Employee Relationships With Educational Lenders

Contents:

PURPOSE:

Penn State students and their families increasingly rely on loans to finance a college education.  As a result, the Pennsylvania State University officers, agents, and employees have more frequent interactions with education loan lenders, and--because of the increasing numbers and complexities of the loans--are often asked by students and their families to provide assistance with regard to their education loan decisions.

Penn State officers, agents and employees are committed to providing that assistance in an objective, fair, clear, and understandable manner, and are bound by professional standards and applicable University policies that prohibit conflicts of interest in this venue.  Penn State officers, agents and employees support these standards and values, and are dedicated to serving students.  Therefore, officers, agents and employees involved in student lending or who interact with education loan lenders are governed by the policy set forth in this institutional “Code of Conduct.”

SCOPE:

This policy applies to all Penn State officers, agents and employees.

OBLIGATIONS OF ALL OFFICERS, AGENTS, AND EMPLOYEES:

Penn State officers, agents and employees:

1. May not solicit, accept, or enter into any agreement in which an education loan lender provides fees, revenue sharing or material benefits to the institution in exchange for the institution or its employees recommending the lender or its loan products;
2. May not solicit, accept from a lender of education loans, or enter into an agreement with a lender of education loans for, any funds that would be allocated or used for private lending (also known as “opportunity loan pools”) or any similar arrangements;
3. May not solicit or accept assistance for call center or financial aid staffing from a lender of education loans;
4. May not solicit or accept gifts from lenders, guarantors or servicers of education loans.
   • Gifts DO include:
     • Any gratuity, favor, discount, entertainment, hospitality, loans at anything other than the published rate (available to all prospective loan recipients), or other item valued at more than a de minimus amount;
     • Services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or by reimbursement.
   • Gifts DO NOT  include:
     • Counseling and educational materials for use by students and their families regarding student lending laws, education loans, financial literacy, debt management and other topics relevant to providing students and their families with financial aid assistance. Any such materials must clearly disclose the source of said materials and may not use trademarks, logos, mascots or other symbols associated with the institution that would suggest any institutional endorsement of the lender or product;
     • Food, refreshments, training, or informational material provided at training sessions that are integral to the professional development of an officer, agent or employee;
     • Staffing on a short-term, nonrecurring basis to assist with aid-related functions during an emergency;
     • Favorable terms, conditions, and benefits of an educational loan if these are offered to all eligible students at the University;
     • Entrance and exit counseling, as long as the counseling session is not promoting the products or services of a particular lender;
     • Philanthropic contributions from lenders, guarantors or servicers that are unrelated to education loans, or any other contribution that is not made in exchange for any education loan funding;
     • State education grants, scholarships, or financial aid funds administered by or on behalf of a state.
5. May serve on an advisory board for a lender or guarantor, but may not accept compensation for these services except for reasonable expenses incurred as a result of that service, which may be reimbursed by the lender or guarantor.
   • The following exceptions to (5.) apply:
     • An officer, agent or employee not employed in the institution’s financial aid office and not responsible for education loans may perform paid or unpaid service on a board of directors of a lender, guarantor or servicer;
     • An officer, agent or employee not employed in an institution’s financial aid office but who is responsible for education loans may perform paid or unpaid service on a board of directors of a lender, guarantor or servicer if the officer, agent or employee recuses themselves from decisions regarding education loans;
     • An officer, agent, employee, or contractor of a lender, guarantor or servicer of education loans may serve on a board of directors, or serve as a trustee, of the institution as long as the board member or trustee recuses themselves from decisions regarding education loans.
6. If participating in an event where expenses were paid by an educational loan lender, must document in writing that their participation was in compliance with provisions of this policy, as stated above.

Penn State officers, agents and employees must inform students who apply for financial aid:

• That Penn State participates in the Federal Direct Loan program and students are encouraged to explore the loan options in this program before pursuing private or alternative loans.
• That students may use any private lender who is eligible to make education loans; and Penn State officers, agents and employees will process applications from these lenders in a timely manner.

OTHER ISSUES:

Separate support organizations, such as alumni associations or booster organizations, must also adhere to appropriate standards of conduct for entering into such agreements, as developed by their professional associations.

Penn State officers, agents and employees may not solicit, accept, or enter into any agreement in violation of the aforementioned items in this policy, and may not engage in conduct that violates the conflict of interest and ethical standards of the institution and may, under no circumstances, offer legal advice. (See “Cross References” below).

Penn State officers, agents and employees will be regularly informed regarding the provisions of this policy.

FURTHER INFORMATION:

For questions, additional detail, or to request changes to this policy, please contact the Office of Budget and Finance.

CROSS REFERENCES:

AD83 - Institutional Financial Conflict of Interest

HR35 - Public Service and Political Endorsements by Members of the Faculty and Staff

HR42 - Payment of Personal Compensation by a State Agency or Department of the Commonwealth

HR80 - Private Consulting Practice

HR91 - Conflict of Interest

RA20 - Individual Conflict of Interest

Most Recent Changes:

• February 1, 2023 - Editorial changes.  Changed all references to the Associate Vice President for Finance to the Associate Vice President for Budget and Finance, per the directive of the Senior Vice President for Finance and Business.

Revision History (and effective dates):

• January 5, 2023 - Editorial changes.  Changed all references to the Office of the Corporate Controller to the Office of Budget and Finance, per the directive of the Associate Vice President for Finance.
• September 2, 2022 - Editorial changes to change Policy Steward from Associate Vice President for Finance and Corporate Controller to Associate Vice President for Finance and to update the Subject Matter Expert.
• November 8, 2018 - Subject Matter Expert added.
• September 13, 2018 - Editorial changes to update the Cross References and to remove the redundant Date Approved, Date Published, and Effective Date information.
• September 27, 2013 - Editorial changes. Addition of policy steward information, in the event that there are questions or requests for changes to the policy.
• September 10, 2013 - Editorial change in CROSS REFERENCES section; replaced reference to Policy RA21 - Institutional Financial Conflict of Interest Involving Sponsored Projects, Dedicated Gifts, Research, Scholarship, and Technology Transfer (obsoleted) with Policy AD83- Institutional Financial Conflict of Interest.
• April 5, 2010 - New Policy.