Officials complete student loan audit

Montana Assistant Attorney General Pam Bucy gave the Montana student loan industry a virtually clean bill of health at the Montana Board of Regents meetings last week.

She said her office would release findings this week from an inquiry made during the summer concerning Montana schools’ relationships with student loan companies.

Bucy called the inquiry’s results “refreshingly different” from those in other states – only a couple minor aspects of Montana’s student loan system need to be changed.

Egregious offenses in the nationwide student loan system, like lenders offering universities kickbacks if they steer students their way, weren’t made in Montana.

The attorney general’s office sent letters to Montana public and private schools asking them to disclose information about their financial aid offices’ relationships with student loan lenders.

Bucy encouraged the board to try to assure that officials in higher education aren’t wearing “so many hats.” For example, Regent Chair Lynn Morrison-Hamilton, as well as regents Lila Taylor and Kerra Melvin, serve on the Student Assistance Foundation’s Board of Directors.

The foundation is a nonprofit organization that services student loans, or keeps students informed of payments and other loan details, and offers has various student support programs.

Myron Hanson, the University of Montana’s director of financial aid, said the inquiry’s clean report didn’t surprise him, and attributed it to the nonprofit organizational structure of statewide loan programs.

“Well over half of our (UM’s) students receive some sort of student loan,” Hanson said, adding that a large percentage of those loans are serviced by SAF.

Bucy’s inquiry followed New York Attorney General Andrew Cuomo’s investigation into the student loan industry that began last November and has turned up corrupt lending practices.

Bucy said questions submitted to schools in June concerned revenue sharing, improper relationships between financial aid officers and lenders, lenders staffing financial aid offices and preferred lender lists.

Bucy said 90 percent of student loans that are issued come from lenders on preferred lists.

UM has a list of more than 150 lenders that students may use, but, Hanson said, UM has never denied students their choice of lender.

Bucy’s other recommendation to the university system was for schools to set qualifications to add or remove lenders from preferred lender lists.

Bucy said her office got a little chuckle when they saw Montana schools disclosed minor contributions from lenders, such as pens and Post-it notes.