Contact: Claudia Keith, ckeith@calstate.edu
Clara Potes-Fellow, cpotes-fellow@calstate.edu
(562) 951-4800

CSU Adopts Additional Safeguards for Student Loan Programs

Many provisions go beyond federal regulations and proposed legislation

(May 16, 2007) – California State University has adopted additional administrative safeguards associated with its student educational loan programs to ensure that they remain in compliance with all federal guidelines regulating such programs.  Many of the CSU provisions are more stringent than federal regulations and proposed Congressional legislation.

The increased attention at the state and federal levels to university practices in the administration of student loan programs prompted the CSU to propose the additional precautions.

“Although the CSU has not found any violations in its financial aid programs, we support the call for more transparency in student loan programs,” said Allison G. Jones, assistant vice chancellor, Academic Affairs, Student Academic Support.  “The additional safeguards are meant to ensure that our financial aid offices continue to operate within the highest ethical standards.  We want to assure our students and their families that the advice and assistance they receive is free of any bias or conflict of interest.”

CSU’s participation in the federal William D. Ford Student Loan (Direct) and the Federal Family Education Loan (FFEL) programs is governed by federal statutory and regulatory provisions with guidance provided by the U.S. Department of Education.  There are 13 CSU campuses in the FFEL program, with 10 in direct lending. 

Under the new provisions, CSU will be required, when developing lender lists, to use a Request for Proposal, Request for Information or the state’s EdFund lender site that indicates lender fees and practices.  The majority of CSU campuses currently follow this practice, but will also list lenders randomly so that a single lender does not always appear at the top of any list.

Prohibited practices include:  no financial aid staff is to solicit any student loan entity to offer financial or other benefits or services to the campus or its staff; serve as a paid consultant to any lender equity or advisory board; accept equipment or supplies used for student loan processing at below market costs from student loan entities; accept reimbursement for transportation and lodging costs to attend any financial aid conference, or accept refreshments or meals provided by a lender for campus training or other events. 

During 2005-06, educational loan programs designed to help students and their parents represented more than $919 million of the $1.7 billion in student aid funding at CSU campuses.  Student indebtedness among CSU students is among the lowest in the nation, primarily as a result of low student fees, the Cal Grant Entitlement Program, and the CSU Board of Trustees’ commitment to fund the CSU State University Grant program.  The average loan for CSU graduates earning a baccalaureate degree was less than $14,000 -- well below the national average.

About California State University

The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 417,000 students and 46,000 faculty and staff.  Since the system was created in 1961, it has awarded nearly 2.5 million degrees, about 86,000 annually.  The CSU is renowned for the quality of its teaching and for the job-ready graduates it produces.  Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California.  With its commitment to excellence, diversity and innovation, the CSU is the university that is working for California.  See www.calstate.edu

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Last Updated: May 16, 2007

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