Lending probe intended to protect students

Friday, August 3, 2007

— Prosecutors said Thursday that an investigation into the relationship between major college athletic departments - including Kansas University - and a student lender is being conducted to protect students.

"There is a risk that students can be deceived," said Benjamin Lawsky, a special assistant to New York Attorney General Andrew Cuomo.

"The lender you chose and their rates and services is something that can impact these students for 10, 20, 30 years," Lawsky said.

Cuomo has subpoenaed records from KU and 38 other universities as part of a probe into whether some universities have improperly led students to take out student loans from Student Financial Services Inc., which does business as University Financial Services.

"We know we haven't done anything wrong," said KU Associate Athletic Director Jim Marchiony.

Marchiony said the KU athletic department's indirect relationship with UFS has no effect on how the department does business.

The athletic department contracts with Host Communications, which pays a fee to KU for KU's athletics media rights. Host Communications sells corporate sponsorships. One of those sponsorships is with UFS, Marchiony said.

UFS is one of seven advertisers at the bottom of the home page of KU athletics' Web site. The ad uses the KU Jayhawk logo and says "Save Money! Lower your student loan payments." It includes a phone number. Clicking on the ad takes one to a UFS link that says "Welcome Jayhawks" and offers a number of loan proposals.

Lawsky said prosecutors are concerned that some marketing tools may lead students to believe "this is something that is being run by the schools."

He added that prosecutors aren't condemning KU but are at the start of trying to gather information.

Cuomo has asked for all documents related to agreements made between UFS and the athletic department.

Marchiony said KU hasn't examined the six-page subpoena yet, but will cooperate with the investigation. He said he would have no problem releasing publicly any documents that KU sends to Cuomo.

UFS has said that its marketing efforts comply with the rules and that it will cooperate with the investigation.