Student Financial Aid Code of Conduct
The ACM Student Financial Aid Office (ACM SFAO) is a member of the National Association of Student Financial Aid Administrators (NASFAA), the Eastern Association of Student Financial Aid Administrators (EASFAA), and the Delaware-District of Columbia-Maryland Association of Student Financial Aid Administrators (DEDCMD ASFAA).
All of our actions and decisions are bound by NASFAA's Statement of Ethical Principles and Code of Conduct for Institutional Financial Aid Professionals (see below) and regulations developed by the Department of Education of the U.S. Federal Government. Staff in our office will always act in the best interest of our students and their families.
Currently, ACM participates in the Federal Direct Student Loan Program. As such, the Department of Education is the lender for all of our Title IV Federal Student Loans. However, should the Federal Family Education Loan Program (FFELP) be revived, the following code of conduct will be adhered to.
Established April 2009 -
The Higher Education Opportunity Act of 2008 requires educational institutions participating in a Title IV Loan Program to adhere to a Code of Conduct, which prohibits conflicts of interest between Allegany College of Maryland's (ACM) officers, employees, and agents with any lender, lender servicer, and/or guarantor. Sections 487 (a) (25) and 487 (e) of the Higher Education Act of 1965, as amended, require the development, administration, and enforcement of a Student Financial Aid Code of Conduct to govern federal student aid programs. Staff members of the ACM Student Financial Aid Office (SFAO) are bound to act in compliance with the ACM Student Financial Aid Code of Conduct, the Maryland State Code of Conduct, and the Statement of Ethical Principles and Code of Conduct from the National Association of Student Financial Aid Administrators (NASFAA).
Officers, employees, contract employees, trustees, and agents, including alumni associations, booster clubs, foundations, athletic organizations, social, academic, and professional organizations, and other organizations directly or indirectly associated with or authorized by ACM, agree to the provisions of the ACM Student Financial Aid Code of Conduct and will refrain from:
- Revenue Sharing
- No officer, employee, or agent of ACM shall enter into any revenue-sharing or profit-sharing arrangement with any lender.
- Denial of Borrower's Lender Choice
- The ACM SFAO shall not deny or delay a Federal Family Education Loan Program (FFELP) borrower his/her choice of a FFELP Lender or Guarantor. The ACM SFAO shall not assign, through any awarding, certifying, or packaging method, a borrower's loan to a particular lender.
- Prepackaging Private/Alternative Loans
- The ACM SFAO will not package a private/alternative education loan as part of the student's financial aid award, unless the student has signed the FFELP Waiver Form and continues to agree to the terms and conditions of the private/alternative loan. The ACM SFAO may suggest that a student borrow under the private/alternative program if the borrower is ineligible for additional funding, has exhausted the limits of the Title IV loan programs, or refuses to complete the Free Application for Federal Student Aid.
- Accepting Gifts, Goods, and/or Services
- No officer, employee, or agent shall solicit or accept impermissible gifts, goods, and/or services from a FFELP or private/alternative lender, lender servicer, and/or guarantor. A gift to any family member of the above mentioned is also not permissible. Gifts, goods, and/or services include: gratuities, meals, travel, lodging, entertainment (expenses for shows, sporting events, or alcoholic beverages), favors, loans, discounts, hospitality (such as private parties of select training or conference attendees), and in-kind services, such as printing customized consumer information for borrowers with the ACM school logo. ACM SFAO staff may accept only items of nominal value, certain services, and/or certain materials. Permissible gifts would include items such as pens, pencils, notepads, sticky-notes, rulers, calculators, small tote bags, and other individual office supply items. An employee may accept any general items of value from a lender, lender servicer, and/or guarantor provided that the item is also offered to the general public. ACM SFAO staff may accept informational brochures and can participate in meals, refreshments, and receptions in conjunction with meetings and trainings that contribute to his/her professional development, and conference events open to all attendees.
- Accepting Philanthropic Contributions
- No officer, employee, or agent shall accept philanthropic contributions from a lender, lender servicer, and/or guarantor that are related to the educational loans provided by the lender, lender servicer, and/or guarantor or that is made in exchange for any advantage related to the educational loan. Educational loans here include loans made by ACM under the private/alternative loan program. ACM will not accept scholarships or grants from a lender or guarantor in exchange for FFELP applications, referrals, a promised loan volume, or placement on the ACM recommended lender list.
- Advisory Board Compensation
- ACM employees with responsibility for any financial aid services will not accept anything of value for serving on or otherwise participating as a member of an advisory council or advisory board for a lender, lender affiliate, lender servicer, or guarantor, except that the employee may be reimbursed for reasonable expenses incurred while serving in such capacities.
- Accepting Compensation for Consulting
- No officer, employee, or agent shall accept from a lender or its affiliate any fee, payment, or other financial benefit, including the opportunity to purchase stock, as compensation for any type of consulting arrangement or other contract to provide education loan-related services to or on behalf of the lender.
- Lender Staff Assistance
- ACM will not request or accept from any lender any assistance with call center staffing or financial aid office staffing. ACM may accept from a lender professional development training and training materials, educational counseling materials, or staffing services on a short-term, nonrecurring basis during emergencies or disasters.
- Competitive Rates Based on Loan Volume
- The ACM SFAO shall not request or accept competitive rates on private/alternative loans in exchange for a specified amount of loan activity or in exchange for endorsing the lender's FFELP loans.
- Lender Affiliated Employment
- ACM SFAO staff members shall not accept full time or part time employment with any educational loan lender, lender servicer, and/or guarantor. Staff members who are approached by these entities shall immediately disclose this information to the SFAO Director.
ACM will not use a Preferred Lender List; however, the SFAO will make use of a Recommended Lender List. The ACM SFAO may request and accept assistance from lenders and/or guarantors to conduct entrance and exit loan counseling. ACM SFAO staff shall always be in control of the counseling sessions and will not permit the lender and/or guarantor representative to promote in any way the specific lender's products or services. ACM will make use of the various lender and/or guarantor's materials and products to aid students in financial literacy.
ACM is committed to providing the information and resources necessary to help every student achieve educational success and will consider the individual needs of each student.
The information contained herein has been provided to all ACM officers, employees, and agents affiliated with this college. In addition, this Student Financial Aid Code of Conduct will be published on the ACM internet site and at least annually, will update the code and inform the officers, employees, and agents of the provisions of this code. Staff, employees, and agents affiliated with this college who fail to comply with this policy will be subject to all applicable disciplinary actions.
Approved by the Board of Trustees July 20, 2009
The State of Maryland's Code of Conduct
The primary goal of the financial aid professional is to help students achieve their educational potential by providing appropriate financial resources. To this end, the ACM Student Financial Aid Office will abide by the College Loan Code of Conduct adopted by the State of Maryland under the direction of Attorney General, Douglas Gansler, on June 13, 2007. In addition, we will adhere to the Statement of Ethical Principles and the Code of Conduct from the National Association of Student Financial Aid Administrators, adopted in April 1999 and amended in May 2007:
College Loan Code of Conduct adopted by the State of Maryland under the direction of Attorney General, Douglas Gansler on June 13, 2007:
- Revenue Sharing Restrictions: Colleges may not receive anything of value from any lending institution in exchange for any advantage sought by the lending institution. Lenders cannot pay to get on a school's preferred lender list.
- Gift and Trip Restrictions: College employees may not take anything, including trips, of more than nominal value from any lending institution, when such things are offered in connection with the employees' financial aid work.
- Advisory Board Compensation Rules: College employees with responsibilities for financial aid work may not receive anything of value for serving on the advisory board of any lending institution.
- Preferred Lender Guidelines: College preferred lender lists must be based solely on the best interests of the students who may use the list without regard to financial interests of the college.
- Preferred Lender Disclosure: On all preferred lender lists the college must clearly and fully disclose the criteria and process used to select preferred lenders. Students must also be told that they have the right and ability to select the lender of their choice regardless of the preferred lender list.
- Loan Resale Disclosure: Colleges may not permit a lender to appear on a preferred lender list unless the lender agrees to disclose to the student at the time of the loan any pre-existing agreements to sell the loan to another lender.
- Call Center Restrictions: Colleges may not permit employees or agents of lenders to identify themselves to students as employees of the colleges. No employee or agent of a lender may be employed by a college financial aid office.
Statement of Ethical Principles and the Code of Conduct from the National Association of Student Financial Aid Administrators, adopted in April 1999 and amended in May 2007
The Financial Aid Professional shall:
- Be committed to removing financial barriers for those who wish to pursue postsecondary learning.
- Make every effort to assist students with financial need.
- Be aware of the issues affecting students and advocate their interests at the institutional, state, and federal levels.
- Support efforts to encourage students, as early as the elementary grades, to aspire to and plan for education beyond high school.
- Educate students and families through quality consumer information.
- Respect the dignity and protect the privacy of students, and assure the confidentiality of student records and personal circumstances.
- Assure equity by applying all need analysis formulas consistently across the institution's full population of student financial aid applicants.
- Provide services that do not discriminate on the basis of race, gender, ethnicity, sexual orientation, religion, disability, age, or economic status.
- Recognize the need for professional development and continuing education opportunities.
- Promote the free expression of ideas and opinions, and foster respect for diverse viewpoints within the profession.
- Commit to the highest level of ethical behavior and refrain from conflict of interest or the perception thereof.
- Maintain the highest level of professionalism, reflecting a commitment to the goals of the National Association of Student Financial Aid Administrators.
Code of Conduct for Institutional Financial Aid Professionals
An institutional financial aid professional is expected to always maintain exemplary standards of professional conduct in all aspects of carrying out his or her responsibilities, specifically including all dealings with any entities involved in any manner in student financial aid, regardless of whether such entities are involved in a government sponsored, subsidized, or regulated activity. In doing so, a financial aid professional should:
Refrain from taking any action for his or her personal benefit.
Refrain from taking any action he or she believes is contrary to law, regulation, or the best interests of the students and parents he or she serves.
Ensure that the information he or she provides is accurate, unbiased, and does not reflect any preference arising from actual or potential personal gain.
Be objective in making decisions and advising his or her institution regarding relationships with any entity involved in any aspect of student financial aid.
Refrain from soliciting or accepting anything of other than nominal value from any entity (other than an institution of higher education or a governmental entity such as the U.S. Department of Education) involved in the making, holding, consolidating or processing of any student loans, including anything of value (including reimbursement of expenses) for serving on an advisory body or as part of a training activity of or sponsored by any such entity.
Disclose to his or her institution, in such manner as his or her institution may prescribe, any involvement with or interest in any entity involved in any aspect of student financial aid.
Adopted by Board of Directors, May 2007
Explanation of NASFAA'S Code of Conduct
As previously noted, financial aid professionals work within vastly differing institutional environments and share decision-making authority regarding financial aid policy, practices, and procedures. NASFAA strongly encourages each financial aid professional to engage his or her institutional colleagues so that there is common understanding regarding the conduct of their respective obligations. To facilitate this exchange, NASFAA has provided the following explanation of the elements of the Code of Conduct:
- "Refrain from taking any action for his or her personal benefit."
While performing one's work in an exemplary fashion should result in "personal benefit" in the form of professional advancement and recognition, this provision obviously relates to actions that are contrary to the obligations the individual has to the institution and its students and their parents. This includes the individual, or a member of his/her family, never accepting cash payments, stocks, club memberships, gifts, entertainment, expense paid trips, or other forms of inappropriate remuneration from any business entity involved in any aspect of student financial aid. It also relates to actions which, while on balance may be supportive of the financial aid professional's work, are chosen from among alternatives because they also benefit the financial aid professional.
- "Refrain from taking any action he or she believes is contrary to law, regulation, or the best interests of the students and parents he or she serves."
The statement - never taking action contrary to law or regulation - should be self-evident. However, note the use of the term "believes to be contrary to law [or] regulation." The financial aid professional works in a complex legal environment. Any doubts as to whether a course of conduct is legally proper should be resolved by referring the matter to the institution's legal advisors for guidance. In addition, the individual should understand and adhere to all institutional policies as well as other local, state or federal requirements that are applicable to his or her conduct or job performance.
- "Ensure that the information he or she provides is accurate, unbiased, and does not reflect any preference arising from actual or potential personal gain."
When providing information, at all times the key should be transparency. Students and parents should be able to fully understand their rights, obligations, and - of paramount importance - their alternatives. Applying these principles to the use of "preferred lender" lists is instructive. If an institution elects to provide such a list, a financial aid professional is expected to demonstrate transparency, completeness, and accuracy of information by ensuring that:
- Students and their parents understand they are not required to use any of the lenders on a "preferred lender" list, are free to select the lender of their choice, and understand the process for selecting a lender and applying for a loan;
- The school will promptly certify any loan from any lender selected by a borrower;
- The process through which "preferred lenders" are selected is fully disclosed;
- Borrowers are provided with consumer information about the loan products offered by entities on a school's "preferred lender" list. Such information must include the disclosure of competitive interest rates, terms, and conditions of federal loans; high quality loan servicing; or additional benefits beyond the standard terms and conditions for such loans.
- The process through which students execute Master Promissory Notes preserves a student's right to select the lender of his or her choice;
- Lenders who are included in a "preferred lender" list disclose agreements to sell their loans to other entities; and
- The selection of lenders for inclusion on a "preferred lender" list is based solely on the best interests of the students and parents who may rely on such a list.
- "Be objective in making decisions and advising his or her institution regarding relationships with any entity involved in any aspect of student financial aid."
Financial aid professionals must always be fair-handed when recommending or entering into a business relationship with any entity offering a product or service related to financial aid. A lender may not be placed on a school's "preferred lender" list in exchange for a prohibited inducement. Placement on a "preferred lender" list, therefore, must not be based on benefits provided to the institution, an employee of the institution, or its students in connection with loans not covered by such list. In the same light, financial aid professionals should not arrange for alternative (i.e., non-federal or "opportunity") loan programs that disadvantage students or parents who do not receive such loans.
Transparency also requires that when a student or parent has communication with what he or she believes to be the institution's financial aid office that is precisely what should occur; no employee or agent of a lender should ever be identified, either directly or by implication, as an employee or agent of the institution.
- "Refrain from soliciting or accepting anything of other than nominal value from any entity (other than an institution of higher education or a governmental entity such as the U. S. Department of Education) involved in the making, holding, consolidating or processing of any student loans, including anything of value (including reimbursement of expenses) for serving on an advisory body or as part of a training activity of or sponsored by any such entity."
The first element in the Code of Conduct prohibits the conflict of interest that arises when one acts for personal gain. This fifth element is intended to avoid the appearance of conflict of interest that arises when a financial aid professional accepts benefits from a lending institution or similar entity. The fact that the financial aid professional may have no intention to provide an advantage to the lender as a result of the benefit he or she receives, and indeed does not provide any such advantage, is not the point. The benefit received by the financial aid professional creates an appearance that he or she may not be impartial, and may not be acting solely in the best interests of the students and parents he or she serves. In our profession such an appearance can do great harm, and it must be strictly avoided.
The term "nominal value" leaves some room for interpretation. This is intentional: many states and institutions have laws and policies that regulate such activities, and it is common for such laws and policies to define with specificity what is meant here by "nominal value." As a general guide, and subject to more restrictive laws and policies, a total retail value of not more than $10 should be considered reasonable. The last component of this element of the Code deals with reimbursement for travel and expenses incurred when serving on lender advisory boards or attending lender-sponsored training activities. There is certainly value in providing lenders with the unique expertise and perspective that only financial aid professionals can provide, but receiving any remuneration for such service, even if only in the form of reimbursement for expenses, creates the appearance of conflict that must be avoided. The same principle applies to reimbursement for lender-sponsored training activities. Professional development is a key component of being an effective financial aid professional, and attending lender sponsored training programs can be a valuable way of obtaining the most current information. Again, however, receiving any remuneration for such attendance from a source other than his or her institution, even in the form of reimbursement for expenses, creates the same impermissible appearance of conflict of interest, and must be avoided.
- "Disclose to his or her institution in such manner as his or her institution may prescribe any involvement with or interest in any entity involved in any aspect of student financial aid."
The same principle of transparency, or avoiding the appearance of conflict of interest, drives this element of the Code. Every institution has a written policy on disclosure of potential conflicts of interest, and a process of determining whether an employee's involvement creates an actual conflict of interest or the appearance of a conflict. It is the obligation of the financial aid professional to strictly abide by the requirements of his or her institution's conflict of interest policy, particularly with regard to any activities, involvement, investment, or interest in any financial aid-related entity. Institutional conflict of interest policies typically describe the nature of investments that require disclosure and review, generally excluding interests held by mutual funds or below a certain minimum value. As a practical matter, financial aid professionals should avoid any investment in or financial relationships with lenders and similar entities.
These principles should apply throughout the administration of the programs for which the financial aid professional is responsible, including Direct Loans, FFELP, and loans originated under the School as Lender program.
There should never be any difference between "ethical" and "best" practices. The ethical practice is the best practice. As an organization, NASFAA unequivocally supports the principles and practices described in this Statement. When a practice or policy arises that appears in conflict with these principles, it is the obligation of the financial aid professional to bring this to the attention of those responsible within his or her institution, and to seek a resolution consistent with these principles.
NASFAA MISSION STATEMENT
The National Association of Student Financial Aid Administrators (NASFAA) supports the training, diversity, and professional development of financial aid administrators; advocates for public policies and programs that increase student access to and success in postsecondary education; and serves as a forum for communication and collaboration on student financial aid issues.