LINCOLN, Neb. (AP) - Student loan company Nelnet made mistakes in some dealings with college financial aid offices, but 'their mistakes were very small,' the Nebraska attorney general said Friday.
Nelnet Inc., based in Lincoln, Neb., paid about $4,800 to a college for successfully referring students to the company for private loans and gave two financial aid officers in Albany, N.Y., plane tickets to travel to New York City for a 'theater event,' the company said Friday.
Bruning and Nelnet officials did not name the universities involved, but Nelnet said the referral agreement was terminated and that the company won't engage in such arrangements in the future.
In the midst of a New York state investigation of the industry, Nelnet said it conducted a review of practices and announced a new code of conduct Friday that includes not providing anything of value to universities or their employees in return for access to students.
Nelnet serves students in 50 states, has about 4,000 employees and $23.8 billion in net student loan assets, according to the company's Web site.
Nelnet said it will change its policy on gifts, won't provide anything worth more than $10 to any financial aid office employee involved with decisions related to student lending, and will stop paying for them to visit Nelnet service centers.
The company currently reimburses expenses members of advisory boards made up of representatives from financial aid offices, including a payment to a university chancellor for speaking at a meeting. Nelnet said it will end such payments.
Nelnet operators also will start clearly identifying themselves when answering calls on behalf of universities.
Universities pay Nelnet to respond to financial aid inquiries from students. If borrowers or potential borrowers ask questions about loans, Nelnet employees will transfer the call back to the school's financial aid office to avoid any conflict of interest.
The company came to Bruning and disclosed the potentially problematic arrangements with universities two months ago, Bruning said.
'This is a good company, this is an ethical company,' Bruning said. 'They care as much as we do about protecting students.'
The company also posted a review of its business practices on its Web site and pledged to spend $1 million on a campaign to educate students and their families about ways to pay for higher education.
Bruning said the agreement should serve as a model for the industry.
Although the federal government sets maximum student loan interest rates, preferred lender lists based on benefits to a college could eliminate competitors who might offer better terms.
Members of Congress say new rules, being pushed by New York Attorney General Andrew Cuomo, on how loan companies deal with campuses, should be applied nationwide.
Several lenders and universities already have settled lawsuits and adopted Cuomo's reforms, which are now part of congressional legislation that could become the first state law on the issue in the nation.
Nelnet President Jeff Noordhoek would not say whether the New York attorney general had offered Nelnet a settlement, only that the company is cooperating with the investigation.
A call to Cuomo's office was not immediately returned Friday afternoon.
The company will encourage schools to give students options on lender lists, Noordhoek said. Nelnet appears as the exclusive preferred lender on fewer than two dozen of the 1,400 lists it is on, the company said.
Nelnet said it would reform its business practices to comply with the code of conduct by Aug. 15.
Nelnet has an arrangement with the University of Nebraska-Lincoln, reached in 2004, that gives Nelnet gets first crack at lending money to graduate and professional students. In exchange, Nelnet pays the school up to $600,000, and that money is used for a scholarship fund.
Bruning said his office is not investigating the University of Nebraska, and he sees no reason an investigation would be necessary.
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