No one in Utah's financial aid sector has personally benefited from recommending one student loan provider over another, said David Feitz, executive director of the Utah Higher Education Assistance Authority (UHEAA).

However, he does worry the national scandal may have a chilling effect on Utah students.

"This sends a message that your financial aid office is not credible, and that's not true. It's the best source of information," he said.

New York Attorney General Andrew Cuomo has alleged that financial aid administrators at some schools have received money from lending companies such as Sallie Mae and Student Loan Xpress in exchange for advising students to seek loans through those companies.

However, no such kickback deals exist in Utah, Feitz said. In the state, when a student applies for a federal student loan, such as a Stafford Loan, the loan automatically is run through UHEAA, which guarantees the loan. The money comes from Utah lenders such as Zions Bank.

The Utah lender keeps the loan while the student is in school, and when the student graduates, UHEAA buys the loan from the bank and the borrower pays UHEAA directly. With that system, UHEAA is able to administer borrower benefits, such as a 3.25 percent reduction in interest rates if borrowers make on-time payments and sign up for automatic withdrawals, Feitz said.

He added that borrowing is the last resort for students who come to UHEAA. If a student has a federal grant that doesn't quite cover costs, UHEAA administrators try to help provide Utah grants to the neediest of students.

"You won't see that at a for-profit company," he said.

He wants to make sure federal legislators know that, too.

Last week, he visited Washington, D.C., to inform Utah legislators to use existing laws to punish those in the financial aid sector who have unethically handled funds, but not to create new laws that could restrict agencies such as UHEAA.

"We're concerned there will be a legislative overreaction, and we'll be painted with the same broad brush as companies that have acted unethically," he said.

John Curl, financial aid director at the University of Utah, says the UHEAA system prevents unethical relationships.

"The students have a lot of choice based on what their situation is," he said, referring to the lenders on the UHEAA list.

John DeVilbiss at Utah State University agrees.

"We're not in the banking business," he said. "We don't have a preferred lender list."

The other public colleges and universities have the same policy, as do private schools such as Brigham Young University. All institutions of higher education, both public and private, can use UHEAA as their guarantor.

"We are in the business of finding the best deals for students," Feitz said of UHEAA and Utah schools' financial aid offices. "We don't want our offices to lose credibility and our students to lose faith in us. We are not being personally enriched from their loans."

smcfarland@sltrib.com