YSU made no student referrals to the loan company, a university
official said.
By H
YOUNGSTOWN — A Florida-based student loan consolidation company under investigation by the New York attorney general provided Youngstown State University with no more than a $2,000 advertising fee, according to a YSU official.
There was no type of other payment or service for any loans that YSU students may have secured through Student Financial Services Inc., doing business as University Financial Services, said Dr. George McCloud, special assistant to the president at YSU for university advancement.
The company's link to athletic departments at 41 colleges and universities across the country is being investigated by Andrew Cuomo, New York attorney general, as part of his larger probe into the student loan industry in general.
YSU is one of those schools asked for documents related to agreements their athletic departments have with UFS. McCloud said YSU didn't conduct any examination of the company before signing an advertising agreement.
Cuomo is investigating whether any athletic departments agreed to promote or recommend UFS loans to students in exchange for kickbacks.
He also wants to know if any of those departments evaluated UFS interest rates before recommending its loans, or if any school made an actual recommendation to a student based purely on payments from the lender. Such an arrangement would be "revenue sharing," which is a violation of both New York and federal law, Cuomo said.
Marketing arrangement
The company's relationship with YSU is strictly a marketing arrangement, McCloud said, adding that the university made no referrals to the company, nor recommended or endorsed its loans to any student.
The company paid to advertise on YSU's athletic department Web site in a one-year contract signed in December. It's one of five companies advertising on that site.
The agreement also allowed UFS to send advertising material on loan consolidation to all YSU graduates in December, and the university provided the company with a graduation list at that time, McCloud said.
The company also had the right to put out advertising material at "cap and gown pickup" for graduating students in December but apparently didn't do so, he said, adding that he isn't aware of UFS material appearing anywhere else on campus.
No inspection
McCloud said YSU didn't do any investigation of UFS operations or loan rates, but got the marketing opportunity from the Horizon League in which the school plays, relying on the league's suggestion for a possible source of advertising revenue.
Will Roleson, a league spokesman, said the league also accepted advertising from UFS on its Web site with arrangements handled by Nelligan Sports Marketing, with which the league has an ongoing advertising relationship.
The league suggested the marketing arrangement to its member schools, he said.
However, the league didn't do any investigation into the company either, relying on Nelligan Sports Marketing to handle that type of task, he said.
Civil as well as criminal charges could come out of the investigation, should revenue sharing be proved, according to Cuomo's office.
However, the attorney general's earlier investigations have not resulted in any penalties, financial or otherwise, against about 30 schools. Those schools have agreed to end their relationships with UFS and to abide by the attorney general's student loan code of conduct, according to a report from Cuomo's office.
Those settlements also involved a dozen lenders who have agreed to contribute a total of $13.7 million to a national educational fund established by Cuomo to help educate and assist high school students and their families with the college financial aid process, the report said.
UFS officials couldn't be reached to comment on the investigation.