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.

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Goal Financial Reaches Agreement With New York Attorney General