Loan Probe Examines Athletics

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By Eric Prisbell
Washington Post Staff Writer
Thursday, August 2, 2007

The New York attorney general's office is investigating whether dozens of college athletic programs, including those at Georgetown, Howard and Virginia Tech, steered athletes to a student loan lender in return for perks and other financial incentives.

New York Attorney General Andrew M. Cuomo (D) announced yesterday that he had served 40 universities with subpoenas and requests for documents in a move that will expand Cuomo's already far-reaching investigation into the student loan industry. The lender in question, Student Financial Services Inc. (SFS), which does business under the name University Financial Services (UFS), was also subpoenaed as part of the investigation.

"Students trust their university's athletic departments because so much of campus life at Division I schools centers around supporting the home team," Cuomo said in a statement. "To betray this trust by promoting loans in exchange for money is a serious issue, especially when Division I schools already generate tremendous revenue from their student athletes."

A Georgetown spokesman confirmed the university received a subpoena from Cuomo's office yesterday afternoon and said the university will review the request and comply when appropriate.

School officials at Virginia Tech and Howard said they were not aware they were involved in the student loan investigation and said they had not received subpoenas. Jeffrey Lerner, a spokesman for Cuomo's office, said Virginia Tech could receive its subpoena tomorrow and that Howard's was sent directly to the president's office.

Among the other prominent schools subpoenaed were Auburn, Georgia Tech, Marquette, Oregon State, Rutgers, Texas Christian, UCLA, Kansas, Louisville, Oregon, Pittsburgh and South Florida.

University Financial Services issued a statement yesterday saying it "embraces a high level of ethics" in its marketing of student loans. "The relationships between our company and athletic departments of various colleges and universities are part of our generalized marketing efforts, the same as advertising at any sporting event, and do not involve the financial aid departments of the schools involved," it said. "UFS is proud of these relationships and believes they were in the best interests of our customers -- recent graduates seeking to refinance existing student loans through consolidation."

Cuomo is also investigating how athletic departments use school team names, mascots, colors and logos to imply that UFS is the school's official lender.

Cuomo's office said it is aware of Web pages that link UFS to many of the schools being investigated. For example, one Web page states UFS is a "proud paying sponsor of Kansas University athletics" but that UFS is not affiliated with the school's financial aid department.

An association between a school and a lender could be a problem if students trust the lender because of its affiliation with the school and are not told that the school may receive something in return from the lender.

"Certainly a Web presence is an indicator that is something worth looking at," Lerner said, "and our researchers have other avenues they pursued to research who has these relationships."

A similar Web page exists for Virginia Tech, which initially was not on Cuomo's list. After a reporter informed Lerner of a Web page that described UFS as a sponsor of Virginia Tech, Lerner said Virginia Tech would also receive a subpoena because of questions concerning its relationship with the lender.

The attorney general's office began investigating UFS's relationship with athletic departments nationwide after it discovered that the athletic director at Dowling College, a Division II school in New York, had entered into a revenue-sharing agreement with UFS.

UFS agreed to pay Dowling College $75 for every loan application that was directed its way from the school's athletic department. The athletic department also agreed to put links to UFS on its Web site and distribute UFS promotional materials to steer students toward UFS loans.

As part of its settlement with the attorney general, Dowling College agreed to terminate the athletic department's relationship with UFS.

Staff writer Adam Kilgore, in Blacksburg, Va., contributed to this report.


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