Facts on ASU Financial Aid
Arizona State University is committed to the highest ethical standards in providing financial aid services to students and our current practices reflect this commitment. We focus on providing our students with the best available options to finance their education and we welcome opportunities to improve the loan products we recommend to our students.
The university conducted a review of its financial aid procedures and is continuing this review to ensure that the university does not engage in practices reported at other institutions. To date we have found no evidence of unethical practices and we have not modified the university’s financial aid policies, but rather discontinued a single aspect of an agreement with one specific private loan lender.
ASU selected Educational Finance Partners (EFP) as a preferred private student loan lender because EFP is a sound, ethical and innovative student loan company, dedicated to providing the best possible loan terms for students. EFP offered to share a portion of its revenue with ASU to benefit ASU students. ASU accumulated $22,000 during a two-year period and these funds were part of the company’s profit on the loans and did not cause students to pay more for their loans. ASU placed these revenue-sharing dollars into a fund for financial aid for students.
Equally important for us, this revenue was not generated by higher interest rates. In fact, EFP offers one of the lowest interest rates available in private student lending. Students benefit from competitively low interest rates and ASU receives a nominal sum for need-based financial aid. Student borrowers were in no way disadvantaged as a result of the revenue-sharing agreement.
There has been concern that schools with “preferred lender lists” direct students to those lenders and may refuse to process loans for non-preferred lenders. At ASU, students are not required to obtain a loan through a lender on ASU’s preferred list and we work with all lenders that offer student loans. In fact, 64% of all private student loans processed by ASU this year have been with non-preferred lenders. ASU encourages students to use the lender they feel best meets their needs.
ASU received communications from the New York Attorney General’s office, along with many other universities across the nation, concerning student lending practices. These communications are not an indication of wrong-doing, nor does it mean ASU is being investigated. Indeed, the university agrees with many of the principles proposed in the New York Attorney General’s communications and is cooperating with the New York Attorney General as he examines the student lending industry.
To our knowledge, there is no law that prohibits a revenue-sharing agreement such as the one ASU had with EFP. However, due to alleged financial aid improprieties, conflicts of interest at other universities and to avoid any confusion or misperception about ASU’s financial aid practices, ASU ended the revenue-sharing aspect of our agreement. Nevertheless, ASU continues to list EFP as a preferred lender due to its competitive low interest rate and borrower benefits.
We recognize that ethical questions can arise from either actual or perceived conflicts of interest between university staff and outside private entities. ASU remains committed to maintaining high ethical standards in financial aid practices and we want to assure you that outside entities do not influence our staff’s dedication to identifying and offering the best student loan options to ASU students.