This article discusses exclusive deals between colleges and student-loan providers and the U.S. Education Department's initial move to solve the conflict. The Higher Education Act, which governs most federal student-aid programs, prohibits colleges from requiring their students to borrow from a specific bank or student-loan company. The law does…

College students are complaining that Congress has made it too difficult to demonstrate financial independence to qualify for federal financial aid. Legislation in 1992 tightened the policy on financial independence to prevent affluent students from cheating the system. Colleges are reluctant to step in for fear of state-conducted audits of…