New York to sue student loan company: report

NEW YORK (Reuters) - New York's state attorney general is planning to sue the student loan company, Goal Financial, accusing it of engaging in illegal practices to lure customers, the New York Times reported on Thursday.

The suit, prepared by attorney general Andrew Cuomo, will charge Goal with breaking state and federal laws by offering iPods, cash and other gifts to potential borrowers, and with misleading consumers about loan terms and benefits, the newspaper said, citing a senior official in Cuomo's office.

The official, who was not identified, said in addition to the Goal lawsuit, the attorney general's office was close to agreements with several other loan companies on what marketing tactics are appropriate.

"The hope is that those settlements will set a new industry standard when it comes to how direct-to-consumer lenders are operating," the official told the Times.

He said Goal, one of the nation's top student load companies, was being targeted because it failed to demonstrate a willingness to change its practices.

Goal could not immediately be reached for comment. An attorney for the San Diego-based company declined to comment to the newspaper.

Cuomo's office had warned Goal that it would be sued and outlined its concerns over the company's marketing practices in a letter in July, the Times said.

The questionable tactics included gifts that could induce borrowers to apply for federal loans, incentives for students who persuaded their classmates to apply and misleading advertising, the report said.

The attorney general was also critical of Goal unit eStudentLoan.com, whose Website claims to help students choose a loan with the best terms but does not disclose that only loans from lenders who paid a commission to Goal were included, the official told the newspaper.

(Reporting by Bill Berkrot; Editing by Louise Heavens)