Financial Aid Code of Conduct

PURPOSE STATEMENT

This Code of Conduct is intended to ensure that the relationships between providers of education loans
and other forms of financial aid to students of the Community Colleges within the Connecticut State
Colleges and Universities (CSCU) system with whom they deal are free from all conflicts of interest, both
actual and perceived. The students of our community colleges or, in appropriate cases their parents,
shall be the sole beneficiaries of all forms of financial aid.

 

I. DEFINITIONS

A. “College” Shall mean any community college within the CSCU system, including the Board of
Regents.

B. “Lending Institution” or “Lender” shall mean any entity that itself, or through an affiliate,
engages in the business of making or guaranteeing loans to students, parents or others for the
purposes of financial higher education expenses. “Lending Institution” or “Lender” shall not include
any community college in the CSCU system, the Board of Regents, the State of Connecticut or the
Federal Government.

C. “Compensation” shall mean anything of value, including but not limited to, money, credits,
loans, discounts, payments, fees, forgiveness of principal or interest, reimbursement of expenses,
charitable contributions, stock options, consulting fees, educational grants, vacations, prizes, gifts or
other items of value, whether given directly or indirectly.

D. “Trade Association” shall mean any higher education financial aid, lending or banking trade,
industry, or professional association that has received compensation with the preceding 12-month
period from any Lending Institution or Lender.

E. “Outside Director” shall mean a member of a lender’s board of directors or board of trustees
who receives compensation from such lender in connection with his or her service on the board of
directors of board of trustees and who receives no other compensation from the lender as an officer,
employee, or agent of the lender.

F. “Agent” shall mean an employee or other person acting as a representative of and at the
direction of or under the control of a college where such person’s responsibilities relate primarily to
the college’s activities involving financial aid or higher education loans.

G. “Affiliated Organization” shall mean an alumni association, booster club, foundation, athletic
organization, social organization, academic organization, professional organization, or other
organization which is affiliated with a college and which is not a separately existing legal entity.

H. “Opportunity Loan” shall mean a loan to any student who, because of his/her credit history or
lack of credit history, does not have access to student loans on reasonable terms.

 

II. CODE OF CONDUCT

A. Prohibition of Certain Compensation to College Employees

 1. No college trustee, director, officer, or agent, including any employee who is employed in the
financial aid office of a college, or who otherwise has responsibilities with respect to higher education
loans or other financial aid at the college, and no spouse or dependent child of any such person
(“family member”) shall accept compensation of more than nominal value (not to exceed the gift
limitations established in the State Code of Ethics), directly or indirectly, from or on behalf of a lending
institution or trade organization. This provision shall not be construed to prohibit any trustee,
director, agent, or employee of a college or any of their family members from receiving compensation
for the conduct of non-college business with any lending institution or trade organization or from
accepting compensation that is offered to the general public, provided receipt of such compensation is
permitted by the State Code of Ethics.

2. Notwithstanding the prohibitions set forth in subsection II.A.1 above or any other prohibition of
this Code of Conduct, (i) a college may hold a membership in any nonprofit professional organization;
and (ii) a college trustee, director, officer, or employee who does not have responsibilities with
respect to higher education loans or financial aid may serve as an outside director of a lending
institution or trade association and receive compensation at the lending institution’s or trade
association’s established compensation rates for outside directors, provided that any college trustee,
director, officer, or employee service on the board of the lending institution or trade association is
precluded from participating in such board’s discussions or decisions that might affect the interests of
the college, and provided further that such college trustee, director, officer or employee complies
with the Board of Regents Ethics Statement and receives annual written notice of this Code of
Conduct and of the Board of Regents Ethics Statement.

3. Notwithstanding the prohibitions set form in subsection II.A.1 above, a trustee, director, officer
or employee of a lending institution or trade association who does not have responsibilities with
respect to higher education loans or financial aid shall not be prevented from serving on the Board of
Regents of CSCU solely by virtue of his or her position with the lending institution or trade association,
provided that any such person is precluded from participating in the Board’s discussions or decisions
that might affect the interests of such lender or trade association.

4. Nothing in this Code of Conduct shall be construed to conflict with the requirements of
Connecticut General Statutes §10a-201 et seq., including without limitation §10a-203(a), and §10a221 et seq.

5. The prohibitions set forth in this subsection II.A shall also include, but not be limited to, a ban on
any payment or reimbursement by a lending institution or trade association to a college employee or
family member for lodging, meals, or travel to conferences or training seminars unless such payment
or reimbursement is related solely to non-college business or is otherwise permitted pursuant to the
State Code of Ethics, Connecticut General Statutes §1-84(k). College employees whose duties relate to
financial aid may accept food or refreshments provided or paid for by a lender or trade association at
a meeting, conference or seminar related to their professional development or training, as permitted
under the State Code of Ethics. College employees are not precluded from attending any educational or training program related to financial aid or higher education loans where no registration fee is
charged to any attendee because of a lender’s or trade association’s sponsorship or support of the
program, and provided that any registration fee is limited to covering the costs associated solely with
the education or training component of the program, if permitted pursuant to the State Code of
Ethics.

 

B. Limitations on Participation on Lender Advisory Boards

No college trustee, director, officer, agent or employee, or any of their family members shall serve on
an advisory board unless such service is unrelated in any way to financial aid or higher education
loans. Lenders can obtain advice and opinions of financial aid officials on financial aid products and
service through trade associations, industry surveys or other mechanisms that do not require service
on lender advisory boards.

 

C. Prohibition of Certain Compensation to a College

 1. No college or any of its affiliated organizations may accept any compensation from any lending
institution or trade association related to the lending institution’s or trade association’s financial aid or
education loan activity. This prohibition shall include, but nor be limited to: (i) revenue sharing by a
lending institution or trade association with a college or affiliated organization; (ii) the receipt by a
college or affiliated organization from any lending institution or trade association of any equipment or
supplies, including, without limitation, computer hardware of software, for which the college or
affiliated organization pays below-market prices; and (iii) printing costs or services provided that a
college or affiliated organization shall not be prohibited from accepting a lender’s or trade
association’s own standard printed brochures or informational material that does not contain the
college logo or otherwise identify the college.

2. Notwithstanding anything else in this subsection II.C, a college may accept assistance
comparable to the kinds of assistance provided by the Secretary of the US Department of Education to
schools under or in furtherance of the Federal Direct Loan Program.

3. Nothing in this subsection shall prohibit a college or affiliated organization from accepting
endowment gifts, capital contributions, scholarship funding, or other financial support from a lender
or trade association, so long as the college gives no competitive advantage or preferential treatment
to the lender or trade association related to its education loan activity in exchange for such support.

 

D. Preferred Lender Lists

In the event that a college promulgates a list of preferred or recommended lenders or similar ranking
or designation (“preferred lender list”), then:

1. Every brochure, web page or other document that sets forth a preferred lender list must clearly
disclose, textually or by clearly designated hyperlink, the process by which the college selected lenders
for said preferred lender list, including but not limited to the criteria used in compiling said list and the
relative importance of those criteria; and

2. Every brochure, web page or other document that sets forth a preferred lender list or identifies
any lender as being on said preferred lender list shall state in the same font and same manner as the
predominant text on the document that students and their parents have the right and ability to select
the education loan provider of their choice, are not required to use any of the lenders on said
preferred lender list, and will suffer no penalty from the college for choosing a lender that is not on
said preferred lender list;

3. A college’s selection of preferred lenders and decision as to where or how prominently on the
list the lending institution’s name appears shall be based solely on the best interests of the student
and parent borrowers, utilizing stated criteria that are limited to benefits provided to borrowers (such
as competitive interest rates and repayment terms, quality of loan servicing, and whether loans will be
sold) and the ability to work efficiently and effectively with the college to process loans, without
regard to the pecuniary interest of the college or to any benefits provided by lending institutions to
the college or any of the college’s trustees, officers, directors, agents or employees or their family
members or to its affiliated organizations. A college’s selection of any preferred lender shall be
limited to the types of loans for which that lender has been selected, based on the benefits to the
borrower for those types of loans, and the college’s preferred lender list shall indicate the types of
loans for which each lender has been selected as a preferred lender. Nothing in this provision is
intended to restrict a college’s ability to exercise its discretion in making its own, final judgment about
which lenders best meet the college’s criteria and the needs of its student and parent borrowers.

4. Colleges shall review their preferred lender lists at least annually;

5. Colleges shall require that all preferred lenders commit, in writing to disclose to the borrower,
at the time a loan is issued: (i) whether the loan may be sold to another lender; (ii) that the loan terms
and benefits will not change if the loan is sold to another lender; and (iii) that the loan benefits may
change if the borrower chooses to consolidate his or her loans.

6. Colleges shall ensure that any preferred lender list that they publish to students contains no
fewer than three (3) lending institutions.

 

E. Prohibition of Lenders’ Staffing of a College Financial Aid Office

1. No employee or other agent of a lending institution may staff a college financial aid office at any
time. Colleges shall ensure that no employee or other representative of a lending institution is ever
identified to students or prospective students of the college of their parents as an employee or agent
of the college. The foregoing prohibitions notwithstanding, if a college believes that it would benefit
students, the college may allow representatives of lenders to conduct informational sessions, such as
exit interviews and presentations on loan payment and loan consolidation options, so long as: (i) student attendance is voluntary; (ii) a college representative explains that other lenders may provide similar services; (iii) the affiliation of the lender representative is disclosed at the start of the presentation; (iv) the lender representative does not promote the products or services of any lender; and (v) the college takes reasonable steps to ensure compliance with the requirements of this paragraph.

2. In the event that a college permits a lender to conduct information sessions or exit interviews as
set forth in subsection II.E.1 above, the college must retain control of any such session or interview
conducted by the lender. Control of an in-person information session or exit interview conducted by a
lender may be evidenced by: (i) a college employee attending such interview or presentation; or (ii)
the college recording or videotaping the session or interview. Control of an information session or exit
interview conducted electronically, via the Internet, may be evidenced by the college creating or
approving in advance the content of such a session or interview.

 

 F. Proper Execution of Master Promissory Notes

Colleges shall not link or otherwise direct potential borrowers to any electronic master promissory
note or other loan agreement unless the master promissory note or agreement allows borrowers to
enter the lender code or name for any lender offering the relevant loan, or unless the college’s link to
the electronic master promissory note or agreement informs borrowers of alternative means of
entering into a master promissory note or agreement with any lender of the borrower’s choice. Any
information that a college provides to borrowers about completing a master promissory note or
agreement with a preferred lender must provide the information required in subsections II.D.1 and
II.D.2 above.

 

G. Requirements for Opportunity Loans

Colleges may enter into arrangements with lender to provide opportunity loans to students whose
credit rating would otherwise preclude them from obtaining loans with reasonable rates and terms.
Such arrangements may be made with a preferred lender after a college has selected preferred
lenders in accordance with the provisions in subsection II.D above. Colleges shall not request, accept,
solicit or consider a lending institution’s offer to provide opportunity loans in exchange for a college’s
providing concessions, benefits or promises to the lender.

 

H. Revolving Door Prohibition

In the event a college hires an employee who will be employed in the financial aid office of the
college or who otherwise will have responsibilities with respect to higher education loans or other
financial aid and such employee was employed by a lender during the 12-month period prior to the
date of hire by the college, such employee shall be prohibited from having any dealings or interactions
with such lender on behalf of the college for a period of twelve (12) months from the date of such
employee’s employment with the lender was terminated.

2. In the event a lender hires an employee who was employed by a college during the 12-month
period prior to the date of such employee’s hire by the lender, the college shall be prohibited from
having any dealings or interactions with such employee for a period of twelve (12) months from the
date such employee’s employment with the college was terminated.

 

I. Miscellaneous Provisions

All provisions of this Code of Conduct should be read in conjunction with the Board of Regents Ethics
Statement and with the Code of Ethics for Public Officials, CGS section 1-79 et seq. and with any
amendments thereto.

 

Adopted September 15, 2008    Revised April 6, 2017