Pitt named in kickback probe
By Michael Hasch
Thursday, August 2, 2007
New York Attorney General Andrew Cuomo is investigating whether the University of Pittsburgh and 38 other schools across the country received kickbacks for steering athletes and other students to a specific student loan provider.
Cuomo announced Wednesday that he has served subpoenas and document requests seeking information from Pitt and the other schools -- including UCLA, Louisville, Rutgers, Georgetown and Youngstown State -- on deals their athletic departments made with Student Financial Services Inc.
Cuomo said he is trying to determine whether the athletic departments evaluated interest rates from Student Financial Services -- doing business under the name University Financial Services -- before recommending the loans to students or whether their endorsement of the company was based "purely on payments" from the lender.
"We are at the information-seeking phase. We are gathering information to better understand the relationship" between the athletic departments and University Financial Services, Cuomo spokeswoman Rashmi Vasisht said.
Pitt spokesman Robert Hill said the school only recently was contacted by Cuomo's office.
"We are conducting an internal review. While in the midst of that review, we obviously haven't learned enough to make a statement," Hill said last night.
Cuomo said he is looking at how team names, mascots and colors were used to suggest University Financial Services was a college's preferred lender.
"Students trust their university's athletic departments because so much of campus life at Division I schools centers around supporting the home team," Cuomo said.
"To betray this trust by promoting loans in exchange for money is a serous issue, especially when Division I schools already generate tremendous revenue from their student athletes."
Vasisht said this is the latest phase of Cuomo's nationwide investigation into the $85 billion student loan industry that found numerous arrangements that benefited schools and lenders at the expense of students.
Vasisht said Cuomo began looking at Pitt and the other schools after investigators learned that University Financial Services paid Dowling College $75 for every loan application directed to them by the Long Island school's athletic department.
"We found some arrangements that raised questions," Vasisht said.
Dowling also agreed to put links to University Financial Services on its Web site and allowed the lender to market loans throughout campus, including bookstores and student unions.
As part of a settlement with Cuomo's office, the school agreed to terminate the athletic department's relationship with University Financial Services.