The Student Lending Accountability Transparency and Enforcement (SLATE) Act of 2007 was enacted into law by the Governor of New York on May 30, 2007. The following provisions of the law are applicable to students attending higher education institutions in the state of New York, parents of those students, institutions of higher education authorized to confer degrees by the state of New York, and employees of those institutions.
Prohibition of gifts made by lenders to institutions and their employees
A lender cannot, directly or indirectly, offer or provide any gift to an institution or its employee in exchange for any advantage or consideration provided to the lender related to its educational loan activities. Also, a lender cannot engage in revenue sharing with an institution.
Prohibition of receipt of gifts by an institution
An institution cannot, directly or indirectly, solicit, accept, or receive any gift from or on behalf of a lender in exchange for any advantage or consideration provided to the lender with regard to its educational loan activity. The institution cannot engage in revenue sharing with a lender.
Prohibition of receipt of gifts by an institution’s employees
An institution must require that their employees do not directly or indirectly solicit, accept, or receive any gift on their own behalf or on behalf of another employee from a lender or on behalf of a lender. An employee must report to the Department any instance of a lender attempting to give a gift to the employee. The law does not restrict an employee from conducting business on his or her own behalf with the lender as long as that business is unrelated whatsoever to the institution.
Prohibition of participation on lender advisory boards
A lender must ensure that no employee of an institution receives any payment for serving as a member or participant of an advisory board or receives any reimbursement of expenses incurred while serving on an advisory board. Likewise, the institution must ensure that no employee receives any payment for serving on a lender’s advisory board or reimbursement of expenses incurred while serving on an advisory board.
The law does not prohibit an employee from participating on a lender’s advisory board that is unrelated to educational loans. Additionally, the law does not prohibit an employee who does not have a direct interest in or does not benefit from the functions of the institution’s financial aid office from serving on the board of directors of a publicly traded or privately held company.
Employees of an institution who are directly involved with or benefit from the functions of the financial aid office are required to report to the New York State Education Department all participation or financial interests related to any lender.
Misleading identification of lender employees
A lender must ensure that its employees or agents do not represent themselves as employees, representatives, or agents of an institution to borrowers or potential borrowers. Also, the institution must ensure that no employee or agent of the lender be identified to borrowers or potential borrowers as an employee, representative, or agent of the institution.
Prohibition of lender employees staffing a financial aid office
Lender employees cannot staff an institution’s financial aid office.
Disclosure of financial aid availability under Title IV of the Higher Education Act
An institution must inform an existing or potential borrower who inquires about financial aid of all Title IV financing options before a lender can provide a private educational loan to the borrower. The institution must inform the borrower of any terms and conditions of Title IV loans that are more favorable than the terms and conditions of a private loan.
Prohibition of high risk loan agreements
A lender and institution cannot enter into an agreement or otherwise provide any high risk loans in exchange for the institution providing concessions or promises to the lender that may prejudice other borrowers or potential borrowers.
Standards for preferred lenders lists
An institution that provides a preferred lender list must comply with the following standards:
Proper execution of Master Promissory Notes (MPN)
An institution cannot direct in any manner whatsoever potential borrowers to an electronic MPN or other loan agreements that do not provide a reasonable and convenient alternative for the borrower to complete the MPN with any federally-approved lender which offers the relevant loan in the state of New York.
Disclosure of default rates
At the request of an institution, a lender must disclose to the institution the historical default rates of private educational loans obtained by borrowers from the institution, the interest rates charged in the year prior to the disclosure, and the number of borrowers obtaining each rate of interest. The lender must provide the information in reasonable detail and form.
Lenders and institutions found in violation of this law may be liable for a civil penalty up to $50,000. An institution’s employee found in violation of this law may be liable for a civil penalty up to $7,500.
A lender found in violation of this law cannot remain or be placed on an institution’s preferred lender list unless a notice of the violation is provided to all potential borrowers at the institution.