The College Board, the nonprofit that owns the SAT exam, is getting out of the student lending business. The organization says new regulations put in place after the industry's recent conflict-of-interest scandals would affect its ability to hold meetings.
The College Board is best known as the owner of the SAT and Advance Placement exams, but it also originated 74,000 student loans last fiscal year, totaling about $400 million.
Now, the organization -- which has faced criticism from some for dabbling in too many endeavors -- says it is dropping that line of business. Even its relatively small loan operations, which account for about 1 percent of revenue, qualify the College Board as a lender under new legislation in New York state and under codes of conduct being implemented by industry groups and schools.
Those regulations prohibit educators from receiving advisory board fees or travel reimbursements from lenders. The College Board said it is already hearing from educators who cannot attend the meetings the organizations hosts regularly.
The College Board said it would not accept new loan applications after Oct. 15 and would honor obligations to current borrowers through the 2007-2008 academic year.
The College Board is a relatively small player in the Federal Family Education Loan Program, which serves about 6.5 million students and parents.
Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said bigger players whose focus is lending were unlikely to be hurt by the new regulatory landscape.
"You push some of the folks for whom it was just an easy way to pick up an easy buck out of the business," Nassirian said. "That doesn't mean student lending has become less profitable." Rather, he said, "It just means there are fewer faces."