Washington — New York’s attorney general, Andrew M. Cuomo, today announced settlement terms with seven more student-loan companies designed to halt their use of deceptive marketing practices.
The seven lenders — Campus Door, EduCap, GMAC Bank, Graduate Loan Associates, Nelnet, NextStudent, and Xanthus Financial Services — agreed as part of the settlement to pay a total of more than $1.4-million into a fund to help students navigate the financial-aid process.
The settlement commits the companies to stop employing a variety of deceptive marketing practices that Mr. Cuomo said they were using. The practices include mailing phony solicitations designed to look as if they came from the federal government, advertising interest rates that are not available to most borrowers, and paying students to sign up their friends.
The announcement marks a resumption of the settlement activity Mr. Cuomo pursued last year, when he persuaded dozens of colleges and lenders to sign similar codes of conduct and make millions of dollars of payments into his student-aid fund.
The investigations were instigated, at least in part, by MyRichUncle, a start-up loan company that fought for business by offering lower rates and publicizing questionable marketing tactics by its competitors. MyRichUncle also endorsed the code of conduct proposed by Mr. Cuomo after its president and co-founder, Raza Khan, provided the attorney general with suggestions on what should be included in it.
Despite its success in drawing attention to industry marketing tactics, MyRichUncle has fallen victim to problems in the overall economy, announcing last week that it no longer had enough money to originate new student loans.
Mr. Khan said today he hoped that recent improvements in the economy, including a drop in oil prices and the federal bailout of the mortgage-guarantor giants Fannie Mae and Freddie Mac, will help make more money available for student-loan companies. —Paul Basken




