Approved by the: Student Senate - March 6, 2014
Administration - no action required*
Board of Regents - no action required

* The University administration concurs with this resolution. The administration has been talking with federal officials about appropriate statutory language that would allow such a change.

Resolution Supporting the Exemption of State Student Loan Programs from the Federal Preferred Lender Requirements

WHEREAS the Higher Education Opportunity Act of 2008 (34 CFR 682.212 and 682.401(HEOA)) requires postsecondary institutions to follow arduous procedures before they can provide guidance or information to students and parents on non-federal loan options; and

WHEREAS unnecessary barriers to providing low interest rate loans have been faced by state and non-profit lenders, such as the MN SELF Loan administered by the MN Office for Higher Education; and

WHEREAS the Coalition of State Education Loan Programs ("Coalition") is comprised of fourteen States, including Minnesota, and

WHEREAS the preferred lender requirements have impaired the ability of institutions to provide parents and students with critical information and guidance regarding non-federal loans; and

WHEREAS the preferred lender regulations have led to a decline in the number of students using Coalition members' state-based loans, even while some state-based loan programs offer better terms and interest rates than federal loan programs; and

WHEREAS education loan programs offered by Coalition members have many of the following consumer-friendly attributes:
* Fixed interest rates - Fixed rates remove the uncertainty associated with variable rate loans, allowing for better financial planning.
* School certification required - Certification provides a vital check to ensure students are borrowing responsibly and loan amounts do not exceed cost of attendance.
* Applicants are informed of the availability of federal and state grants and federal loans - Before borrowing, students are informed of the availability of programs which may provide less expensive financing.
* Consistent interest rates regardless of institution type - No variation in loan cost for 2-year, 4-year, public or private institutions.

THEREFORE, BE IT RESOLVED that the Student Senate supports providing state-based lenders with a statutory exemption from the requirements of the preferred lender provisions of the HEOA, and

BE IT FURTHER RESOLVED that the Student Senate will collaborate with the Minnesota Student Legislation Coalition to advocate for the enactment of this change.

Reference Links:
View supporting information here.
MN SELF Loan information here.

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