As another student loan company agreed to pay millions to settle allegations that it used kickbacks to secure business from universities and colleges, New York state prosecutors sought the records of 13 more lenders.

The Wall Street Journal reported that state investigators issued subpoenas to SunTrust Banks, Regions Financial, College Loan Corp., Access Group, and Edfinancial Services.

Investigators made less-formal requests for information of Bank of America, J.P. Morgan Chase, Wells Fargo, Wachovia, National City Corp., PNC Financial Services Group, U.S. Bancorp and Citizens Financial Corp.
They also subpoenaed records from the College Board, the trade group that administers the SAT admissions test, the Journal said.

The new actions came after New York attorney general Andrew Cuomo said Education Finance Partners, a San Francisco-based student loan company, agreed to contribute $2.5 million to a fund devoted to educating college bound students about their loan options.

Two universities—St. John's and Fordham—had already agreed to repay students who took out Education Finance Partners loans that earned money for the schools under revenue sharing agreements. St. John's will pay back $80,553 and Fordham will pay back $13,840.

They were among more than 60 universities that Cuomo said had taken "kickbacks" to put Education Finance Partners on their lists of "preferred lenders." The company said that any payments it made to the schools "did not impact the terms of costs" of loans and were disclosed to students, the Journal reported.

Cuomo, however, contends that paying fees to appear on a university-sponsored list of "preferred lenders" is a deceptive business practice. About 90 percent of students who borrow money to finance their education do so from a list of preferred lenders provided by their schools.

Cuomo is trying to establish if lenders are named "preferred lenders" because they offer the best terms to students or because they offer the biggest payments to universities or the best perks to college officials.

Eight colleges have settled with Cuomo so far, the Journal reported. Sallie Mae, which controls nearly one-fourth of all student loans, also has settled with Cuomo over allegedly deceptive practices.

A consortium of private equity firms and big banks agreed to buy Sallie Mae for $25 billion this week. The banks—J.P. Morgan Chase and Bank of America—are among those from which Cuomo's office is now seeking records.

Cuomo and leaders of the Legislature introduced legislation yesterday to forbid lenders to share revenue from student loans with colleges, or to offer gifts or jobs to school officials in exchange for being recommended to students.