NY’s Cuomo Expands Student Loan Probe To Athletic Departments

By MICHAEL GORMLEY Associated Press Writer

ALBANY, N.Y. (AP) – Division I athletic departments have mixed reactions to a national student loan investigation announced this week, some saying arrangements with lenders are harmless, like a local grocery store using a team logo on a poster.

Others have opened internal reviews and suspended deals. New York Attorney General Andrew Cuomo said Wednesday he’s investigating whether top college athletic departments steered athletes and other students to loan companies in exchange for kickbacks. He served 39 universities with subpoenas and requests for documents about deals between their 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,” said Cuomo. “To betray this trust by promoting loans in exchange for money is a serious issue.”

Texas Christian University said it is “suspending any association” with a UFS program, arranged through the sports marketing company International Sports Properties, which coordinates contracts with its athletics department. “ISP set up a national contract with a student loan vendor, called University Financial Services, and marketed that program to students. The athletic department received no revenue directly from this vendor,” TCU said.

Other schools defended their practices and said Cuomo was premature in issuing subpoenas and going public. “If they had contacted us, we could have given them a very reasonable explanation, as I’m sure a lot of schools could have,” said University of Kansas Associate Athletic Director Jim Marchiony. “Kansas athletics does not have a direct relationship with UFS,” Marchiony said.

“UFS has a direct relationship with a Kansas athletic rights holder, which was ESPN Regional – but that has now been taken over by Host Communications.” He said the university doesn’t provide students names to the lender or receive any payments from UFS.

Ohio University spokeswoman Sally Linder said the school’s relationship with UFS is legitimate and that the athletics department does not endorse the company or steer students toward particular lenders. She said the university’s deal with UFS is “a well-established, appropriate way for an athletics department to raise funds.”

Programs at other schools, however, are under internal review. “Auburn University has no preferred provider of student financial aid,” said athletics spokesman Kirk Sampson. “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.” The University of Louisville is reviewing an agreement with UFS and Nelligan Sports Marketing, which manages the teams’ marketing rights, said spokesman John D. Drees.

The current investigation is as an outgrowth of Cuomo’s national probe of student loan providers and college administrators, which he said uncovered a pattern of favoritism for lenders who provided kickbacks, revenue sharing plans, and trips in exchange for recommended lender status. Sometimes the colleges provided campus employees to staff telephone banks for lenders drumming up business.

Cuomo’s findings have led to state and national reforms. The investigation has resulted in settlements 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. — Associated Press writers Nancy Zuckerbrod and Marcy Gordon contributed to this report from Washington and Dallas.

(Copyright 2007 by The Associated Press. All Rights Reserved.)