Nelnet to pay $1 mln over student loan impropriety

(Updates with NY investigation details, updates share price, adds byline)

By Emily Chasan

NEW YORK, April 20 (Reuters) - Student loan provider Nelnet Inc. (NNI.N) said on Friday it agreed with the Nebraska Attorney General to pay $1 million for an educational campaign after disclosing improper student loan lending practices.

As the lending industry has come under scrutiny in recent months, Nebraska Attorney General Jon Bruning said on Friday that Nelnet approached his office two months ago to disclose some improper behavior.

Nelnet had improperly paid out $4,800 in a revenue sharing agreement with a school and purchased a plane ticket for an Albany admissions officer, Bruning said.

"As we looked at the scale of mistakes that have been made in the student lending industry, Nelnet was at the very bottom of the scale," Bruning said at a news conference in Lincoln, Nebraska, on Friday. "Nelnet self-disclosed, Nelnet has paid $1 million, which is meaningful, and Nelnet really didn't make any mistakes that rise to the level of some of these other companies."

The $1 million Nelnet is paying in its agreement with the Nebraska Attorney General will be committed to a nationwide campaign that will help educate students and families on how to plan and pay for education.

As part of the agreement, the company also plans to create and adopt a code of conduct, saying it will not pay or give anything of value to schools and university officials and establish a "student bill of rights."

Several U.S. states and Congress have targeted about 20 banks and loan companies, alleging that university lending officials took kickbacks in exchange for giving the companies "preferred lender" status. New York Attorney General Andrew Cuomo, however, said he would continue to investigate the company as part of his probe into student lending.

"I am pleased to see the Code of Conduct we developed continuing to spread nationwide. Our investigation of Nelnet is continuing," Cuomo said in a statement on Friday.

Nelnet has been under scrutiny from Cuomo's office since as early as February.

Bruning said the $4,800 Nelnet paid as part of the improper revenue-sharing agreement had been designated for scholarships for needy students.

Nelnet shares, which were trading higher before the announcement, slipped following the news. In afternoon trading on Friday, Nelnet shares were off 1.2 percent at $26.69 on the New York Stock Exchange.

(Additional Reporting by Swagata Gupta in Bangalore and Joe Giannone in New York)

((Reporting by Emily Chasan, editing by Deborah Cohen; Reuters Messaging: rm://emily.chasan.reuters.com@reuters.net +1 646 223 6114)) Keywords: NELNET AGREEMENT/

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