Goal Financial Reaches Agreement With New York Attorney General

Student Loan Girl — Thu, 06 Nov 2008 22:53:00 GMT

Alexandria, Virginia-based Goal Financial is the most recent student loan company to reach a settlement with the New York Attorney General’s office, whose investigation into the student loan industry revealed that several lenders used deceptive marketing practices to lure borrowers, The New York Times reports (“Another Student Loan Company Settles With New York,” Oct. 30, 2008).

The attorney general’s office found that some lenders, including Goal, led consumers to believe that their direct mail pieces were marketing low-interest federal student loans and not private student loans (“Student Loan Companies in Settlement Talks,” The Associated Press, Sept. 5, 2008). “Some of the seals [used by private lenders] looked very similar to those of the federal government,” said Alex Detrick, a spokesman for the attorney general's office.

Goal was also accused of offering incentives like gift cards, iPods, and other items to entice borrowers into taking out private student loans. In a letter sent to Goal last July, New York Attorney General Andrew Cuomo stated that the student loan company’s marketing collateral also gave “misleading examples of monthly payment amounts and annual savings,” the Associated Press reported.

Goal has agreed to adopt a marketing code of conduct created by Cuomo’s office that prohibits the use of deceptive marketing tactics and forbids student loan lenders from offering gifts as incentives to attract borrowers. The student loan company will also pay $350,000 to a fund that will be used to educate students about their financial aid options.

“In these times of increasingly tight credit, it is crucial,” Cuomo said, “that students and their parents get solid, truthful information on which to base their loan decisions.”

Eight other student loan providers have agreed to abide by the marketing code of conduct, and seven of those companies have already contributed more than $1.4 million to the financial aid–related education fund.

Share this post: email this | del.icio.us | reddit

NY Attorney General To Sue Student Loan Lender For Deceptive Marketing

Student Loan Girl — Mon, 08 Sep 2008 21:18:00 GMT

New York Attorney General Andrew Cuomo plans to sue student loan provider Goal Financial, LLC for using deceptive marketing practices to attract new business, according to a CNNMoney.com article (“Student Lenders Under Scrutiny,” Sept. 5, 2008).

Eight other lenders being investigated for misleading borrowers are currently negotiating settlements with the New York Attorney General’s office. Unlike these lenders, Goal Financial did not indicate a willingness to make needed reforms to its marketing practices after Cuomo’s office sent a letter in July informing the lender of the attorney general’s intent to sue.

In the letter, Cuomo indicated that, in addition to using deceptive marketing materials, Goal Financial gave borrowers misleading information about what their monthly student loan payments and annual savings could be, and illegally offered incentives, like iPods or gift cards, to students who convinced other students to apply for Goal Financial’s student loans.

Cuomo’s office also accused the Virginia-based student loan company, which was the sixth-largest lender of consolidated student loans in 2006, of referring borrowers to a student loan comparison Website that Goal Financial owned, without disclosing that the comparison site only listed lenders who paid Goal Financial to include them on the site.

The eight other lenders in Cuomo’s investigation are accused of deceptively marketing private student loans so that they appeared to be federal student loans. The lenders allegedly e-mailed or mailed potential borrowers marketing material about private student loans that closely resembled the government’s marketing material for federal student loans.

“Some of the seals [used by lenders] looked very similar to those of the federal government,” said Alex Detrick, a spokesperson for the attorney general’s office.

These findings come on heels of an investigation conducted last year by the New York Attorney General’s office that found colleges and universities across the country were including certain student loan providers on their “preferred” lender lists in exchange for kickbacks. Schools issue preferred lender lists to their students to help them find a lender for their federal student loans, a practice that Cuomo argued may have sent a disproportionate amount of student loan borrowers to certain lenders.

Since the investigation, at least 22 schools have adopted new codes of conduct and have agreed to overhaul the way in which they do business with student loan lenders.

Share this post: email this | del.icio.us | reddit

Student Loan Blog : deceptive marketing

Goal Financial Reaches Agreement With New York Attorney General

NY Attorney General To Sue Student Loan Lender For Deceptive Marketing