Student lender must make changes
A Clearwater company can't "co-brand" loans or use school insignias.
By TOM MARSHALL, Times Staff Writer
Published December 12, 2007
Don't look for school mascots in future student loan offers.
On Tuesday, the attorneys general of Florida and New York announced a settlement with Clearwater's Student Financial Services that bars it from "co-branding" student loans with school names and insignias.
"When student loan companies use school insignia, colors and mascots in advertising, they imply that the company is recommended by the university as the 'official' loan provider of the university," Florida Attorney General Bill McCollum said in a statement. "This is misleading to both students and their parents."
Student Financial Services, a loan consolidation company, marketed its products to 63 colleges nationwide, including 57 NCAA Division I schools. Those schools included the University of South Florida, Florida State University, University of Central Florida, Florida Atlantic University and Nova Southeastern University.
Under the contracts, the company paid the schools a fixed annual fee and sometimes a percentage of completed loans, Florida officials said. In return, the company used school logos, team names, colors and mascots to advertise its products on school Web sites, at athletic events or by mail. Under the settlement, all of those contracts will be terminated.
"They must cease all lending agreements by (Dec.) 31st, which will effectively put them out of business," unless the company substantially alters its practices, said Sandi Copes, a spokeswoman for the Florida Attorney General's Office.
The company, which also has done business as University Financial Services, will pay no financial penalty.
But officials said the company also agreed to end lending-related agreements with five sports marketing firms including ESPN Regional Television Inc.; launch a print advertising campaign on student lending practices at all 63 schools; disclose all loan terms in future student deals; and adopt a code of conduct that forbids false and misleading advertising.
It will also "end the practice of (paying) cash-based inducements for signing loans or obtaining referrals," Copes said.
The agreement is the latest in a year of reforms for the financial aid industry, following revelations last winter by New York Attorney General Andrew Cuomo of revenue-sharing deals between schools and lenders.