Andrew M. Cuomo, the New York attorney general, announced today that his office had begun serving subpoenas and sending requests for information to 90 college alumni associations that have deals with the National Education Loan Network, a lender known as Nelnet. Under the arrangements, the associations receive payments for consolidation loans taken out by their alumni.
The Chronicle first reported on such deals in April. At the time, Nelnet said it had agreements with 120 alumni associations. According to the company, independent alumni associations each receive an unspecified upfront payment and additional royalties for every application over a set benchmark. Associations that are affiliated with their colleges get only the upfront payment, known as a license fee. Federal anti-inducements law, which bars colleges from accepting payments in exchange for loan applications, applies only to affiliated alumni associations.
Mr. Cuomo, who has been investigating conflicts of interest in the student-loan industry, also said that a 22nd institution, Dowling College, had signed his code of conduct. Dowling had a relationship with Sallie Mae, the biggest student-loan company, in which the college agreed to sell loans it had made to students to the lender and then recommend Sallie Mae to students seeking to consolidate their loans.
In addition, Dowling’s athletics director had a separate arrangement with University Financial Services, another lender, that gave the company the right to put Dowling mascots and logos in its marketing materials and use the athletics department’s interns to distribute those materials on the campus. In exchange, the department would receive $75 for each loan consolidated by its students, alumni, and staff members.
University Financial Services told The Chronicle in April that it had similar arrangements with nine other institutions. The company’s president said it had stopped offering the deal a year ago because most athletics programs were more interested in straightforward sponsorship agreements.
As part of its agreement with Mr. Cuomo’s office, Dowling College said it would end its agreements with both Sallie Mae and University Financial Services. The college said it never received any payments under the latter arrangement. —Kelly Field




