Archive for Wednesday, August 8, 2007

Loan probe

University athletic departments now are drawing attention in an investigation about kickbacks from student loan companies.

August 8, 2007


If well-regarded academic units have done it, it's not surprising that some American college athletic departments might have steered student athletes to education lenders in exchange for kickbacks. Andrew Cuomo, New York's attorney general, is heading up an investigation which, in the early going, indicates that schools including Kansas University, Auburn University, Ohio State University and Texas Christian University may be involved in such activities.

Cuomo says he has served 39 universities, KU among them, with subpoenas and requests for documents about deals between athletic departments and Student Financial Services Inc., which operates as University Financial Services. He says he's looking at how team names, mascots and colors have been used to suggest the company is a college's preferred lender.

Says Cuomo: "Students trust their university's athletic departments because so much of campus life at Division I schools centers around supporting the home team. 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."

The probe was started as an outgrowth of a broad national investigation of student loan providers and college administrators. Investigators sensed a pattern of favoritism for lenders who provided "revenue-sharing" plans, trips and other gifts in exchange for designations as recommended lenders. Sometimes, colleges actually provided campus employees to staff telephone banks for lenders trying to drum up business.

Cuomo said that during his first investigation, he found the athletic director of Dowling College on New York's Long Island entered into a revenue-sharing agreement with University Financial Services that paid $75 for every new loan application, gave it exclusive marketing advantages on campus and allowed the lender to use the department's interns to disseminate its brochures.

So far the probe has resulted in settlements and reforms with 12 lenders 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. Good has resulted from bad, it seems.

Jim Marchiony, associate athletic director at Kansas, says no one from the New York attorney general's office ever contacted KU. He also says the athletic department does not have a direct relationship with University Financial Services.

"Kansas athletics does not give out the names of current or former student athletes to UFS, and we do not receive a penny from UFS based on how many students or student-athletes apply for student loans with UFS," Marchiony said.

Whether or not KU is involved, this situation, only reiterates how the field of higher education and its departments have become such terribly big business and how they can become entangled in questionable financial practices in their quest for added funding of almost any kind.

But usually it's the athletic departments that get into trouble first, rather than the academic side setting the pace as has occurred in this situation.


Jackalope 10 years, 8 months ago

It is a sad state of affairs when virtually anything evil is presumed to be possible in regards to athletic departments. But, that is what has become the norm primarily because of the actions of the athletic departments

toefungus 10 years, 8 months ago

Universities are in a very difficult spot. The mission of education is not all together compatible with the mission of athletics. There may come a time when the two need to go there separate ways. Universities can license their names to the athletic corporations, like they do when they discover a new cancer treatment. Then the Athletic functions hires players with an agreement they support the school, but not necessarily take classes. This balancing act is becoming more and more damaging to higher education. Go KU, inc.

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