Lender Code of Conduct
Susquehanna University bases its selection of preferred loan lenders solely on the best interests of its students and their parents.
Though the university makes every effort to ensure that lenders on our list provide the least expensive loans and best service possible, students and parents have the right and ability to select the lender of their choice, regardless of our preferred lender list.
The university does not accept anything of value from any lending institution in exchange for any advantage sought by the lending institution. In addition, no lender may bargain to become a preferred lender with respect to a certain type of loan by providing benefits to the university.
Susquehanna's Office of Financial Aid staff do not take anything of more than nominal value from any lending institution. Financial aid staff do not receive anything of value for serving on an advisory board of any lending institution.
The university excludes from its lender list any lender that has an agreement to sell its loans to another lender and does not disclose this fact.
Susquehanna requires lenders to identify themselves to students and parents as representatives of their companies. Susquehanna does not allow any employee of a lender to work in or provide staffing assistance to the Office of Financial Aid.
Preferred Lender List Selection Process
Federal loan regulations, set by the Department of Education, require a school that chooses to provide a Recommended Lender List to borrowers to disclose their method of selecting the lenders included on their list of suggested lenders. This guide is to provide information to borrowers about the method Susquehanna University's Financial Aid Office used to create the Preferred Lender List.
According to Section 682.212 of the Federal Register, published by the Department of Education, "A school may, at its option, make available a list of recommended or suggested lenders, in print or any other medium or form, for use by the school's students or their parents, provided such list:
- Is not used to deny or otherwise impede a borrower's choice of lender
- Does not contain fewer than three lenders that are not affiliated with each other and that will make loans to borrowers or students attending the school
- Does not include lenders that have offered, or have offered in response to a solicitation by the school, financial or other benefits to the school in exchange for inclusion on the list or any promise that a certain number of loan applications will be sent to the lender by the school or its students" (U.S. Department of Education, 2007).
Why a Preferred Lender List?
Provides a comparison of selected lenders in relatively consistent terms, reducing confusion and assisting borrowers and their families in making the best-informed decisions.
Steps Taken With Decision Process
- A Request for Information (RFI) was sent out to those lenders most often chosen by SU students with a list of questions regarding their products and services. These questions included the following topics:
- Origination Fee - Grace Period
- Standard Repayment Term - Extended Repayment Term
- Current Interest Rate - Interest Rate Ceiling
- Interest Rate Structure
- Up-Front Borrower Benefits
- Possible Guarantors
- Possible Loan Servicers
- Borrower Benefits at Repayment - Additional Discounts
- Percentage of Borrowers who Qualify for Benefits
Once all information had been gathered and considered, the committee within the student financial services office made a decision on particular criteria (which are listed below).
Criteria Used to Select Lenders
Borrower Benefits—In considering benefits, it was important to evaluate the lenders who offer borrower benefits to students as well as the percentage of the actual borrowers who qualified for such benefits. Such borrower benefits that were evaluated included the following:
- Interest rates and terms
- Fees paid by the lender or the responsibility of the borrower
- Availability of repayment options back-end borrower benefits (i.e. principal reduction, interest rate reduction, etc.)
Quality of Lender Products and Services—In evaluating lenders' quality of products and services, it was important to determine which lenders provide exceptional customer service to its borrowers as well as the school. Such quality of products and services criteria used to evaluate each lender was as follows:
- Ease of application process
- Web-based application and services
- Proactive customer communication, including easy access to borrower's current and cumulative borrowing and estimated repayment information
- A toll-free number for information and advice
- Timely and responsive processing of loans including resolving issues
- Expedient and simple PLUS pre-approval processes
- Knowledgeable customer service representatives
- Dedicated service or marketing representative assigned to the school
- Lender's practice to recommend students to maximize Federal financial aid first
Lender Stability—With regulatory changes and market instability affecting lenders' decisions to remain in the student loan industry, it was important to select lenders who are reliable and will continue to service borrowers for future years. Such lender stability criteria used to review each lender included the following:
- Mission Statement
- Number of years in the student loan business
- Source of stability of capital used in providing loans
- Relationships with other loan partners
- Existing relationships with guarantee agencies
- Default rates
- Reputation at the local, state, regional and national levels
- Marketing practices including promotion of products and services
- Demonstrated security of borrower information