Students sitting on the third floor of the Student Center studying and having conversations.

Student Loan Code of Conduct

The Higher Education Opportunity Act of 2008 (HEOA) requires an educational institution that participates in Title IV financial aid programs to comply with a Code of Conduct that prohibits a conflict of interest with the responsibilities of an institutional officer, employee and agent of the school with respect to educational loans. Montclair State University is committed to the highest standards of ethics and has adopted the following federally mandated Code of Conduct:

1. Preferred Lender Arrangement

Montclair State University has no preferred lender arrangement with any lender of the private educational loans and therefore does not maintain a preferred lender list.

2. Revenue-Sharing Arrangements

Neither Montclair State University nor any of its officers, employees or agents shall enter into a revenue-sharing arrangement with any lender. For purposes of this paragraph, the term revenue-sharing arrangement means an arrangement between an institution and a lender under which:

  • A lender provides or issues a private education loan to students attending the institution or to the families of such students; and
  • The institution recommends the lender or the loan products of the lender and in exchange, the lender pays a fee or provides other material benefits, including revenue or profit sharing, to the institution, an officer, employee or an agent.

3. Receiving Gifts from a Lender, a Guarantor, or a Loan Servicer

No officer, employee or agent of the institution who is employed in the financial aid office or who otherwise has responsibilities with respect to private education loans, shall solicit or accept any gift from a lender, guarantor, or servicer of any education loans.

Definition of Gift

  • For purposes of this paragraph, the term ‘gift’ means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. The term includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.
  • The term gift does not include any of the following:
    • Standard material, activities, or programs on issues related to a loan, default aversion, default prevention, or financial literacy, such as a brochure, a workshop, or training.
    • Food, refreshments, training, or informational material furnished to an officer or employee or to an agent as an integral part of a training session that is designed to improve the service of a lender, guarantor, or servicer of education loans to the institution, if such training contributes to the professional development of the officer, employee or agent.
    • Favorable terms, conditions, and borrower benefits on an education loan provided to a student employed by the institution if such terms, conditions, or benefits are comparable to those provided to all students of the institution.
    • Entrance and exit counseling services provided to borrowers to meet the institution’s responsibilities for entrance and exit counseling as required by §§682.604(f) and 682.604(g), as long as the institution’s staff are in control of the counseling (whether in person or via electronic capabilities) and such counseling does not promote the products or services of any specific lender.
    • Philanthropic contributions to an institution from a lender, servicer, or guarantor of education loans that are unrelated to education loans or any contribution from any lender, servicer, or guarantor that is not made in exchange for any advantage related to education loans.
    • State education grants, scholarships, or financial aid funds administered by or on behalf of a State; and

(iii) For purposes of this paragraph, a gift to a family member of an officer, employee or agent, or to any other individual based on that individual’s relationship with the officer, employee or agent, is considered a gift to the agent if:

  • The gift is given with the knowledge and acquiescence of the officer, employee or agent; and
  • The officer, employee or agent has reason to believe the gift was given because of the official position of the officer, employee or agent.

4. Contracting Arrangements Providing Financial Benefit

An officer, employee or agent who is employed in the financial aid office or who otherwise has responsibilities with respect to education loans must not accept from any lender or affiliate of any lender 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 services to a lender or on behalf of a lender relating to education loans.

5. Directing Borrowers to Lenders or Delaying Loan Certifications

Montclair State University participates in the Federal Direct Loan program. In regards to other education loans, the University shall not:

  • For any first-time borrower, assign, through award packaging or other methods, the borrower’s loan to a particular lender; or
  • Refuse to certify, or delay certification of, any loan based on the borrower’s selection of a particular lender or guaranty agency;

6. Offers of Funds for Private Loans

Montclair State University shall not request or accept from any lender any offer of funds to be used for private education loans, including funds for an opportunity pool loan, to students in exchange for the institution providing concessions or promises regarding providing the lender with:

  • A specified number of private education loans;
  • A specified loan volume of such loans; or
  • A preferred lender arrangement for such loans.

‘Opportunity Pool Loan’ means a private education loan made by a lender to a student attending the institution or the family member of such a student that involves a payment, directly or indirectly, by such institution of points, premiums, additional interest, or financial support to such lender for the purpose of such lender extending credit to the student or the family.

7. Staffing Assistance

Montclair State University shall not request or accept from any lender any assistance with call center staffing or financial aid office staffing, except that nothing in this paragraph will be construed to prohibit the institution from requesting or accepting assistance from a lender related to:

  • Professional development training for financial aid administrators;
  • Providing educational counseling materials, financial literacy materials, or debt management materials to borrowers, provided that such materials disclose to borrowers the identification of any lender that assisted in preparing or providing such materials.

8. Advisory Board Compensation

Any Montclair State University employee who is employed in the financial aid office, or who otherwise has responsibilities with respect to education loans or other student financial aid of the institution, and who serves on an advisory board, commission, or group established by a lender, guarantor, or group of lenders or guarantors, must not receive anything of value from the lender, guarantor, or group of lenders or guarantors, except that the employee may be reimbursed for reasonable expenses, as that term is defined in §668.16(d)(2)(ii), incurred in serving on such advisory board, commission, or group consistent with applicable University policies.

Note: If a question arises whether a certain activity is prohibited either by this Code of Conduct or Montclair State University’s Ethics regulations, please see your supervisor. For example, gifts of de minimis value may be allowed under this Code of Conduct but may be prohibited by the Montclair State University’s Ethics regulations. In all cases, stricter standard of ethical policy will apply.