ALBANY - Attorney General Andrew Cuomo's office has developed a code of conduct designed to make it easier for students to compare the terms of loans offered through direct marketing - which officials are concerned could lead to deceptive practices, according to a person in the attorney general's office familiar with the investigation.

Attorney General Andrew Cuomo's office announced two months ago that it was extending its student loan probe to subpoena 33 companies that sell their products directly to students through television, internet and mail advertisements.

Now his office has designed a system that would prevent those companies from misleading the public, according to the official, who spoke on condition of anonymity because the office is currently in negotiations with several lenders.

Cuomo's goal is to have lenders sign the code of conduct, and his office expects to announce the first of those agreements with lenders sometime this week, the official said.

The concern was that students could be misled into signing a loan that appeared to be through the federal government, or had a poor interest rate.

Under the agreement, companies would have to sign a uniform disclosure statement that would require them to list an annual percentage rate and provide students with an estimate of what their monthly payment would be and the amount they would pay for the life of the loan, the official said.

Lenders would also be prohibited from using false insignia or other devices that appear to be part of the federal government. They also won't be able to use checks, deceptive rebate offers or other gimmicks to entice students

Lenders would also be required to inform students that they can get the best deal through federal loans.

“We're in discussions with many companies,” the official said. “We've got several that appear to be promising. Our hope is that it will quickly spread and become the industry norm.”

To entice students, some of the companies offered gift cards of up to $500 to customers, used fake checks and rebates, provided $100 gift cards to recruit other students, and advertised $25,000 and $50,000 sweepstakes, officials said.

Earlier this year, Cuomo's investigation of conflicts of interest in deals between lenders and colleges to designate preferred lenders helped lead to national reform of the industry. Cuomo won millions of dollars in penalties from dozens of lenders and colleges nationwide.

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