A developing scandal over ties between the student loan industry and college financial aid officers is adding momentum to a congressional push to overhaul the system for college loans.

Congress members say new rules, being pushed by New York Attorney General Andrew Cuomo, on how loan companies deal with campuses should be applied nationwide.

"The case for major reform cannot be clearer," said Massachusetts Democrat Edward Kennedy, who leads the Senate education committee. "Our current student loan system is broken, and national reform is required."

Cuomo says his investigators uncovered numerous arrangements that benefited schools and lenders at the expense of students. For example, investigators say lenders have provided all-expense paid trips for college financial aid officers who then steered students to the lenders.

Cuomo's office has found that loan officers at a few schools had stock in a company that owned Student Loan Xpress, which was on the schools' preferred lender lists.

MSU is not one of these schools, said Val Meyers, associate director of MSU's Office of Financial Aid.

"We don't do anything like that," Meyers said Wednesday. "Occasionally, people will ask us to."

A student's loan information is confidential unless he or she says otherwise, Meyers added.

"You have to release it," she said. "Anytime you give us information, you have to tell us that it's OK to share it."

MSU participates in the Michigan Students First Loan Program, which offers benefits to students and parents, such as reduced interest rates and delayed repayment of loans until after graduation.

"We chose them solely on the benefits for parents and students," Meyers said. "We don't think we need to be concerned."

Cuomo has agreements with industry leaders Sallie Mae and Citibank and some colleges in which the lenders and schools will adopt a code of conduct. Many in Washington, from both parties, see the code as a potential model for a federal law.

The code bans lenders from paying colleges in exchange for being designated a preferred lender. It also bans lenders from paying for trips for financial aid officers and other college officials. Lenders also cannot pay college employees to serve on advisory boards.

"I can't speak for the whole university, but nobody here at financial aid gets paid for being on lender boards," Meyers said. "A lot of schools never take anything. Most schools will take pens and pencils they'll hand out in their offices."

The Education Department also is working to address the relationship between lenders and student aid offices.

Sallie Mae would oppose that step, company spokesman Tom Joyce said.

"We think those decisions should be made at the school level, not by bureaucrats in Washington," Joyce said.

Lenders, he added, sometimes give students lower rates when loan volume is high at their schools.

Education Secretary Margaret Spellings recently asked a member of a panel providing advice on student loan rule-making to step down. Cuomo's investigation indicated that Johns Hopkins University loan officer Ellen Frishberg received consulting fees and had her graduate school tuition paid by Student Loan Xpress.

Spellings also placed a department official, Matteo Fontana, on leave after it was disclosed that while overseeing the loan industry, he owned at least $100,000 of stock in the former parent company of Student Loan Xpress.

Fontana previously worked in the student-lending industry.

The legislation that emerges probably will become part of a higher education bill that Congress is expected to pass this year.

Staff writer Kristi Jourdan contributed to this report.