The director of Drexel University's financial aid office said yesterday that more than $100,000 that the university received from a student-loan firm was used for student scholarships.

New York Attorney General Andrew Cuomo's widening probe into the college loan industry has cited questionable practices by three Philadelphia-area institutions - Drexel, Widener University and the University of Pennsylvania.

On March 22, he described the more than $100,000 paid by Education Finance Partners to Drexel as "kickbacks." He said his office would file a lawsuit against Education Finance Partners for what he called "deceptive practices."

Under Drexel's agreement with Education Finance Partners, dated April 1, 2006, Cuomo said Drexel agreed to make the lender its "sole preferred private loan provider." In return, Drexel received a percentage of the net value of all loans that had been referred.

Melissa Englund, Drexel executive director of financial aid, said in an interview yesterday that "all funds that we received as revenue reinvestment have been used solely for student scholarships. Drexel has complied with all legal and ethical standards of the financial-aid profession."

Cuomo said about 90 percent of students chose lenders from their school's preferred-lender lists. Revenue-sharing agreements, such as that between Education Finance Partners and schools like Drexel, constitute a deceptive business practice, he said.

Education Finance Partners, a San Francisco firm, had such arrangements with more than 60 colleges, including two other Pennsylvania schools - Duquesne University and Muhlenberg College - as well as Baylor University, Boston University, Fordham University and Washington University in St. Louis.

Another lender, SLM Corp., commonly known as Sallie Mae, and eight colleges have agreed to reimburse students for inflated loan prices caused by revenue-sharing agreements.

The schools are Penn, Fordham, Long Island University, New York University, St. John's, St. Lawrence, SUNY and Syracuse.

Penn said Wednesday that it would repay almost 3,000 students an average of $500 each. Penn acknowledged receiving a 2 percent fee from Citibank for each loan in the Penn CitiAssist loan program in the 2006 and 2007 academic years.

Earlier this week, Widener University in Chester placed Walter Cathie, its dean of financial aid, on leave. Cuomo's office said Cathie had been paid $80,000 by Student Loan Xpress since 2005.

Investigators said they believed Cathie had an agreement with the lender to market its services to graduate schools, receiving fees based on loan volume.

Cuomo's office asked Widener on Monday to provide documentation on how the university had selected its preferred lenders for the last six years.

"The most lucrative deals that we have come across so far were NYU and Penn," through Citibank, said Arthur Harris, Cuomo's press secretary. "Drexel got the most through Education Finance Partners. Drexel got over $100,000, and they could have gotten over $300,000 but never did."

Telephone calls yesterday to several other Philadelphia-area colleges - including Temple University, Rutgers University, Pennsylvania State University and St. Joseph's University - found that none have preferred-lender agreements with companies. Those schools said they had not been contacted by the New York attorney general.

Contact staff writer Linda Loyd at 215-854-2831 or