Article published August 02, 2007
ATHLETICS
BGSU queried in loan scandal; documents sought from 40 universities
By MEGHAN GILBERT
BLADE STAFF WRITER
BOWLING GREEN — Bowling Green State University is one of 40 universities served subpoenas and document requests yesterday as part of the ongoing investigation into the student loan industry.
New York State Attorney General Andrew Cuomo is seeking information regarding deals the schools’ athletics departments made with the student loan provider, Student Financial Services Inc., which does business under the name University Financial Services.
In addition to BGSU, three other Ohio universities and three in Michigan were the subject of document requests.
Mr. Cuomo’s office is investigating whether athletic departments agreed to promote the loan provider in exchange for kickbacks.
BGSU acknowledged yesterday that the athletics department had an agreement in 2006 with the loan provider without the administration’s knowledge and that it was quickly stopped.
“About a year ago, an employee in the athletics department did sign an agreement. But when administration became aware of that, the contract was declared void,” said Kim McBroom, the university’s associate vice president of marketing and communications.
Ms. McBroom would not disclose who the employee was but said the person no longer is with the university and left by accepting another position, not as a direct result of the situation.
The loan provider paid BGSU $7,500 through the agreement, which was in place for about two to three months before it was discovered and stopped by the administration and the university’s attorneys. That money was returned to the company, Ms. McBroom said.
“We no longer have any type of agreement or business relationship with that company,” she said.
To the university’s knowledge, no loans went through University Financial Services as part of the agreement, Ms. McBroom said.
The Ohio Attorney General’s Office is handling the information requests on behalf of BGSU, she said.
The contract between BGSU’s athletics department and the loan provider appears to have been inked during the same time the school’s athletics leadership was in a state of flux.
Paul Krebs, who had been BGSU’s athletics director for seven years, was hired in March, 2006, for the same position at the University of New Mexico and left BGSU in late April of that year.
Greg Christopher was named his replacement June 13, 2006, and he started in late July of last year. Mr. Christopher came from Purdue University, where he was the associate athletics director for external relations.
The investigation into student loan scandals expanded to athletics departments after the New York Attorney General’s Office found evidence of revenue sharing in schools’ financial departments — including individuals personally benefiting — and alumni associations.
“Very rarely were these practices isolated incidents,” said Jeffrey Lerner, a spokesman for Mr. Cuomo.
The colleges and universities that were asked to reveal contract information had some sort of relationship with University Financial Services. The New York Attorney General’s Office wants to further explore those agreements, Mr. Lerner said.
The other Ohio schools that were asked for contract information were Ohio University, Wright State University, and Youngstown State University.
In Michigan, Central Michigan University, the University of Detroit Mercy, and Wayne State University were asked to provide information.
Thirty-eight of the colleges and universities are Division I schools.
The office is specifically investigating whether the athletics departments evaluated the interest rates of University Financial Services before recommending them as a provider or if the endorsement was based on payments from the lender.
If the latter was the case, that would be considered revenue sharing and a violation of federal law as well as of New York state consumer protection laws, according to Mr. Cuomo’s office.
In a written statement issued late yesterday, University Financial Services said: “The relationships between our company and athletics departments of various colleges and universities are part of our generalized marketing efforts, the same as advertising at any sporting event, and do not involve the financial aid departments of the schools involved … UFS supports the student loan code of conduct and plans to fully cooperate with the New York Attorney General’s Office.”
An investigation by the New York Attorney General’s Office of Dowling College on Long Island revealed that its athletics director had a contract with University Financial Services.
As part of the deal, the college received $75 for every loan application directed to the loan provider in exchange for placing links to University Financial Services on the athletics department’s Web site and handing out promotional materials for the loan provider.
The athletics department also gave the company permission to market its loans throughout campus in places such as book stores and student unions, and to use athletics interns to help distribute promotional items at events, according to Mr. Cuomo’s office.
That relationship was terminated as part of the settlement with the attorney general.
The investigation into the student loan industry has resulted in settlements with 12 student loan companies, with some agreeing to contribute a total of $13.7 million to the National Education Fund that aims to educate and assist high school students and their families about the financial aid process.
“Students trust their university’s athletics departments because so much of campus life at Division I schools centers [on] supporting the home team,” Mr. 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.”
Yesterday’s action “is an important new step as we continue to examine the unethical conflicts that pervade the student loan industry,” Mr. Cuomo said in the statement.
This report includes information from the Associated Press.
Contact Meghan Gilbert at: mgilbert@theblade.com or 419-724-6134.
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