THE November 26, 1985 Vol. 84, No. 22
ATISTA
Tuesday Edition
Central State University, Edmond, Oklahoma
Foggy night
Vista photographer Tom Gilbert shot this foggy weather view of the campus Sunday night on Baumann Street facing west towards the student union.
Financial aid director warns:
Loans may require needless investments By Curtis Killman Editor With many students already searching for ways to fund their 1986 college year, financial aid personnel are sending out warnings about some reportedly misleading sales techniques being given by insurance companies. The insurance companies, capitalizing on a stagnant Oklahoma economy, have begun competing with banks and savings and loan institutions in the guaranteed student loan program. Financial aid experts say some insurance companies are requiring students or parents of students to purchase an insurance policy so they can receive a guaranteed student loan. After purchasing the insurance policy, many parents later find out they do not meet federal guidelines qualifying them for the student loan. The person is then stuck with the insurance policy, but still does not have the school loan. But, according to one insurance company representative, all the bad publicity is a result of a few companies that abused the loan program. "There has been a lot of abuse that has taken place by different insurance companies," said Forrest White, spokesman for Eagle Group Agency in Oklahoma City. "We've been very careful. We started doing the student loans after the abuses had already taken place." Sherri Hancock, director of CSU student financial aid, advises that a guaranteed student loan can be obtained without purchas-
"This is something new, the insurance companies have just discovered this program can be a money maker," — Sherri Hancock, CSU financial aid director. ing insurance. "Unfortunately, from what I can understand," Hancock said, "insurance agents sell insurance, and at the time that they're selling insurance, they're saying, 'now this will guarantee you a student loan.' "They're neglecting to tell some of these people that they still have to qualify for the guaranteed student loan. A lot of parents have been really upset because they've bought insurance and a lot of times they're paying $300 to $600 for an annual premium up front." Hancock said people seeking loans don't receive all the necessary information up front. "They get it a month later, then they read over it and say 'Oh, dear, am I going to qualify for this or not?"' In order to qualify for the guaranteed student loan program, a family can make up to $30,000. Families making more than $30,000 may also qualify, but must fill out a needs test first. Loan amounts range up to $2,500 per academic year for undergraduates and $5,000 for graduate or professional students. "We have had many numbers of students (come in) with guaranteed student loan applications filled out, feeling assured, because of the insurance agents, that they
qualify and the company has guaranteed they will get them just by buying insurance," Hancock said. "They're not quite always telling clients the whole truth." White said their insurance representatives have been told to explain to customers that they must qualify for the guaranteed student first. "Some people have been loading up students with a whole lot of insurance and actually made the implication that you had to buy the insurance to get the loan," White said. "We're very careful not to do that. In response to complaints last spring, the Oklahoma State Insurance Commission stepped in to straighten out some of the misleading sales techniques. Gary Livingston, investigator for the State Insurance Commission, said they are aware of the loan problems. He said they asked one insurance company, Occidental Life based in North Carolina, to revise their marketing practices. All of Occidental's agents that were misrepresenting the program were fired by the company, according to Livingston. "Our concern is that the students not have the impression that they must have an insurance policy in order to be eligible for the guaranteed student loan," Livingston
said. "A certain lender, if they're an approved lender, can put various stipulations on it, but there are many available lenders in the state of Oklahoma which have no restrictions that have anything at all to do with purchasing an insurance policy." Livingston said the company usually commits a certain amount of money to the guaranteed student loan program. The pitfall is if the student gets to college age and the parents don't qualify because they make too much money, then they can't get the guaranteed student loan. They still have a life insurance policy, which is still valid. Livingston said he has not received any complaints since last spring. Insurance companies have just recently become interested in the student loan programs, according to Hancock. "This is something new," Hancock said, "the insurance companies have just discovered this program can be a money maker — and it is. The lenders that get into it get into it big and they can make money off it. "If they want to borrow from an insurance company, in connection with buying the insurance, that's fine, but if they don't need the insurance and don't want that expense then they don't have to pay it. "I don't want to put them (insurance companies) down because it's nice to have a participating lending program, but it doesn't seem quite fair that they don't let people know that they can borrow this if they qualify whether (or not) they buy insurance," she concluded.