Student Loan Company To End Collegiate Revenue-Sharing Deals
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Cuomo Reaches Settlement
With Student Financial Services |
Florida-based Student Financial Services (SFS) has reached a settlement with New York state Attorney General Andrew Cuomo in which SFS has “agreed to end revenue-sharing relationships with colleges and their athletic departments,” according to Karen Freifeld of BLOOMBERG NEWS. Cuomo called the practice “a kickback scheme” involving 63 schools and five sports marketing companies. He said that SFS “paid the schools for generating loans and for the right to use” team names, mascots and logos to “advertise directly to students” (BLOOMBERG NEWS, 12/11). Cuomo said that the practice “was a deception, intended to imply the company was the official lender of the school or was a part of the school itself." Cuomo: “The school’s mascot becomes a wolf in sheep’s clothing.” USA TODAY’s Carey & Wieberg report as part of the settlement, SFS will buy ads in college newspapers “warning students to protect themselves when looking for a loan” and will end “cash-based inducements such as paying students to refer others” (USA TODAY, 12/12). SFS “will not pay any penalty, but will adopt a new code of conduct on direct marketing” developed by Cuomo’s office. Of the 63 schools that used SFS, 17 have already suspended their relationships (N.Y. TIMES, 12/12).
COMPANY CLAIMS IT DID NOTHING WRONG: Nelligan Sports Marketing Chair & CEO T.J. Nelligan, whose company was one of the five that worked with SFS, “argued that the companies did nothing wrong.” Nelligan: “This is a fishing expedition that was linked with the student loan crisis.” Nelligan added that SFS is “‘no different’ from any other college athletics sponsor ... and college students are smart enough to know what an advertisement is” (Newark STAR-LEDGER, 12/12).
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