MyRichUncle: student lender leverages loan scandal

By Helen Chernikoff

NEW YORK (Reuters) - At least one company is benefiting from government investigations into the U.S. student loan industry.

MRU Holdings Inc.'s (UNCL.O: Quote, Profile, Research, Stock Buzz) MyRichUncle hopes to cash in on the scandal with marketing that aims to differentiate its alternative loan products from heavyweight competitors such as Sallie Mae (SLM.N: Quote, Profile, Research, Stock Buzz).

The company bills itself as a bargain lender untainted by the investigations, which have put a variety of lenders, including Sallie Mae, Bank of America Corp. (BAC.N: Quote, Profile, Research, Stock Buzz), Citigroup Inc. (C.N: Quote, Profile, Research, Stock Buzz), Education Finance Partners and JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz), under the government's microscope.

For instance, one of MyRichUncle's loan products uses a student's academic achievement as a basis to extend credit, even in the absence of credit history or a guarantor.

Congressional and state investigators are probing methods used by the $85-billion-a-year student loan industry to entice college loan officers to place them on so-called preferred lender lists.

An ad MyRichUncle ran in The New York Times last July urged students to ask aid officers if they participate in "revenue sharing" that gives schools part of each loan, or if they accept gifts from lenders -- practices that later came under scrutiny.

In January, New York State Attorney General Andrew Cuomo began the investigation into the industry when announced he was questioning Sallie Mae about its lending practices.

Journalists began writing about MyRichUncle as a conflict-free alternative, which boosted the stock, said Sanders Morris Harris analyst William Hamilton, who rates the company's shares a "buy."