Memorandum: University Lender Protocols

To: University of Tennessee, Knoxville community
From: Provost Robert Holub
Re: University Lender Protocols
Date: May 22, 2007

In light of recent scrutiny of college loan programs, I have been reviewing the university's preferred lender program.

Specifically, I have examined the university's procedures for selecting preferred providers and its position regarding employee involvement on advisory boards of loan servicing companies or related programs. In reviewing these policies, I have concluded that our employees have acted properly and have worked to put the interests of students first.

Although University employees have never served on direct lender boards, and although the University has very stringent guidelines related to disclosure for its employees, to avoid appearance of conflict of interest, I have devised a broadened set of guidelines.

As national scrutiny of the college loan system continues, the University will continue to review and update its policies, and make adjustments as needed, to ensure that the needs of our students remain the top priority of the institution.

Following are the University's new guidelines, which conform to nationwide calls for transparency:

• In place of the current committee that now determines preferred lenders, the University will form a "Lender Advisory Board." Members will be appointed by the Provost, and the board will include representatives from the Bursar's Office, the Financial Aid Office, the Graduate School and the College of Law, as well as the general faculty and staff and the student body. The board will report to the Provost.
• To evaluate lenders, the committee will develop a written checklist based on the current selection philosophy of putting students' needs first. The checklist will use objective criteria, as well as an evaluation of lender performance. This checklist will be used to determine the list of preferred lenders, which will then be subject to the Provost's approval.
• University employees who serve on the Lender Advisory Board may not serve on boards for direct lenders, or receive any gifts or payments from these organizations.
• Employees may serve on advisory boards for loan servicing companies or related companies, but not direct lenders. There is a benefit in employees lending their expertise about student needs to these organizations. Employees may not be paid for such service on advisory boards, and they may not accept directors' fees, consulting fees or gifts of any kind for this service. In addition, travel expenses must be paid by the employee's unit. These employees may only be reimbursed by the University for expenses related to advisory board service, and receipts of those expenses must be filed with the University. Employees must disclose all relationships with these organizations in line with University conflict of interest policies and procedures.