UCLA is one of 40 universities subpoenaed by New York State Attorney General Andrew Cuomo in his investigation into the relationship between college athletic departments and student loan providers.
The attorney general requested or subpoenaed documents from schools on Aug. 1, targeting many NCAA Division I schools, and his office is working to determine whether the schools’ athletic departments suggested students use University Financial Services, a loan provider, in exchange for kickbacks. The loan provider was also subpoenaed.
UCLA is one of the universities under investigation because it is an NCAA Division I school.
“The Athletic Department does not have any kind of relationship with University Financial Services,” said Mark Dellins, sports information director.
The loan provider contacted UCLA’s corporate partner, International Sports Property, which is a sports marketing firm, to make a deal with the university, Dellins said, but the university rejected the deal.
This year, Cuomo has conducted an investigation of the student loan industry that has revealed that schools have put certain companies on their preferred-lender lists in exchange for kickbacks.
Cuomo has received $13.7 million in settlements from 12 student loan companies, according to the Los Angeles Times.
The only other university in the state to be investigated was California State University Sacramento. Frank Whitlatch, the associate vice president of public affairs at the university, said CSU Sacramento had an agreement with University Financial Services for a year that ended in May.
“But we didn’t collect any funds as part of that agreement,” Whitlatch said. “Our attorney needs to look over a subpoena and determine how best to respond.”
Cuomo is specifically investigating whether athletic departments evaluated University Financial Services interest rates before recommending their federal loans or if endorsing the provider was based only on payments from the lender.
The difference is whether they believe the company was actually beneficial to students or if the university was only endorsing the company in exchange for gifts. If the latter is the case, it would be considered revenue sharing, and thereby a violation of federal law and New York State consumer protection laws, according to a press release from Cuomo’s office.
The investigation began after Cuomo discovered that the athletic director of Dowling College, a school in Long Island, New York, had entered into a revenue sharing agreement with University Financial Services on behalf of the college.
The loan provider would pay Dowling College $75 for every loan application directed to University Financial Services from the athletic department, according to Cuomo’s press release. The athletic department also agreed to put links to University Financial Services on their Web site, hand out promotional materials, and let the lending company market their loans throughout campus.
“Students trust their universities’ athletic departments because so much of campus life at Division I schools centers around supporting the home team,” Cuomo said in a statement.
“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.”