Florida Student Loan Subpoenas
New York State Attorney General Andrew Cuomo expanded his investigation of student lenders and their relationship with universities recently by issuing subpoenas to 40 athletic departments across the nation. Florida is at the center of the new inquiries.
In a statement issued by Cuomo on August 1, the attorney general said he was requesting documents related to the university athletic departments' relationship with Clearwater-based Student Financial Services Inc., which operates University Financial Services (UFS). Among the schools to receive subpoenas: Florida Atlantic University, the University of Central Florida, and the University of South Florida.
Cuomo's office wants to know if the colleges in question investigated UFS' interest rates before recommending the company. He also questions whether the endorsement “was based purely on payments from the lender.”
USF spokesperson Ken Gullete called the contract with UFS an “arm's length agreement.” The school has already been subject to inquiries from the Florida attorney general's office which found no illegal activity. Gullete “expect(s) that to be the case this time,” he said.
The University of South Florida-affiliated web page that is part of the financial service company’s site includes a banner that says: “Go USF Bulls.” It is laid out in the school colors of green and gold. The only indication that the financial services company is unaffiliated with the school is in small type at the very bottom of the page where its reads “UFS is a proud paying sponsor of University of South Florida Athletics.”
UFS has similar pages customized with the school colors, and even specific phone numbers for most of the schools subpoenaed in the investigation.
Florida State Attorney General Bill McCollum is cooperating with Cuomo in the investigation and has issued additional subpoenas in the state. The Florida AG is drafting a code of conduct for universities to follow with lenders, spokesperson Sandi Copes said.
FAU released a statement regarding the investigation that said in part: “The university is in receipt of the request for documents from the NY Attorney General’s Office. The request asks for documents related to the university’s relationship with University Financial Services, a company the university severed ties with several months ago.”
However, the financial services company’s website for FAU is still live.
Cuomo's office believes that the use of the schools' mascots and team colors were meant to give the impression that UFS was the institutions' preferred lender.
It is easy to see how students, who are typically new to the world of loans and managing debt, could assume that UFS is an organization directly sponsored by their university. Even the lender's name is conveniently vague. Numerous colleges across the country call their own financial counseling departments “University Financial Services.”
The schools included in the investigation have until August 14 to comply with the documents request.