August 2, 2007 in Nation/World

Student loan inquiry turns to athletics

Michael Gormley Associated Press
 

ALBANY, N.Y. – New York Attorney General Andrew Cuomo is now investigating whether top college athletic departments nationwide – including those at Auburn University, Ohio University and Texas Christian University – steered athletes and other students to education lenders in exchange for kickbacks.

Cuomo said Wednesday that he served 39 universities with subpoenas and requests for documents about deals between athletic departments and Student Financial Services Inc., which operates as University Financial Services. He said he’s looking at how team names, mascots and colors were used to suggest the company was the college’s preferred lender.

“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. “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.”

Cuomo began the investigation as an outgrowth of his national inquiry of student loan providers and college administrators, which he said uncovered a pattern of favoritism for lenders who provided kickbacks, “revenue sharing” plans, trips and other gifts in exchange for designations as recommended lenders. Sometimes the colleges provided campus employees to staff telephone banks for lenders drumming up business.

In a written statement issued late Wednesday, University Financial Services said: “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.”

Ohio University spokeswoman Sally Linder said the school received a subpoena and will cooperate with Cuomo, as it did in a student loan probe by the Ohio attorney general’s office. She declined further comment until the university’s lawyers review the subpoena.

Auburn athletics spokesman Kirk Sampson said the university has no preferred provider of student financial aid.

“However, the Auburn Athletic Department will thoroughly examine and respond to any suggestion that the university’s name, logo or any representation of it has been used improperly in connection with specific lenders,” Sampson said.

Cuomo’s investigation has resulted in settlements and reforms with 12 lenders – including Nelnet Inc., Citibank, Sallie Mae, JP Morgan Chase and Bank of America – and several colleges, with $13.7 million in payments made to a national education fund to help high school students and their families more wisely and safely apply for student loans.

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