Student Lender to End Deals With Colleges for Use of Logos

New York Attorney General Andrew M. Cuomo announced a settlement yesterday with a student loan consolidation company that had been paying universities to use their logos, team names and mascots to generate business.

Florida-based Student Financial Services agreed to end its deals with 63 colleges, including Georgetown and Howard universities and the University of Pittsburgh. The company generally paid schools a flat rate to use the logos and team names to market loans, according to Cuomo's office. Most schools also received a fee for each application completed.

Benjamin Lawsky, deputy counselor and special assistant to Cuomo, said representatives from Student Financial Services sought business at sporting events and other school-sponsored activities, leading some students to think the company was endorsed by the school. He said, for instance, that Georgetown students were offered the Go Hoyas Loan and Auburn University students the Tiger Loan.

The company "simply bought the right to exploit the students' trust in their schools and the students' enthusiasm for their teams," Lawsky said. "It allowed them to fool students into thinking they were taking loans that were sponsored by the schools, and the schools were paid off to let that happen."

Officials at Student Financial Services did not return calls for comment yesterday. Under the settlement, the company agreed to follow a code of conduct developed by Cuomo intended to prevent false or misleading direct marketing to students.

The settlement, also approved by Florida Attorney General Bill McCollum, was the latest effort by officials and lawmakers to fix problems in the $85 billion-a-year student loan industry. In recent months, federal and state investigations have found conflicts of interest among lenders, universities and government regulators. Most of the focus has been on federally subsidized loans.

Yesterday's settlement, which was praised by some officials and watchdog groups, came amid efforts in Congress to improve oversight of private lenders. The College Opportunity and Affordability Act, which passed a House committee last month, seeks to bar lenders from "co-branding" loans using a college's name or logo and would prohibit school financial aid officers from serving as advisers to private lenders.

"I am very glad that Attorney General Cuomo is continuing to hold lenders accountable for practices that could deceive students and families," Rep. George Miller (D-Calif.), chairman of the House education committee, said in a statement. "Consumers clearly need and deserve better protections when navigating the often murky world of student loans, and we intend to enact our reforms into law in the coming months."

The investigation into Student Financial Services began this summer, officials said. According to Cuomo's office, the company began using school logos to market loans last year. Some agreements were made directly with colleges' athletic departments, and others were made with marketing firms representing the schools.

Student Financial Services generally paid $2,500 to $15,000 for the right to use a school's name, officials said. They said they had not calculated the total amount the company paid to the universities. The schools did not monitor the company's activities.

Other schools that had contracts with Student Financial Services include James Madison University, Old Dominion University, Virginia Tech and the University of Maryland Eastern Shore.