Like many lenders that offer private loans to students, Loan to Learn has benefited greatly from a boom in which such loans have seen their share of the market grow to 18 percent of all student loans and about 10 percent of all student aid awarded -- a total of $13.8 billion in 2004-5.

But in a complaint filed last week with the Federal Trade Commission, the United States Student Association charges that Loan to Learn and its parent company, EduCap, Inc., have built their successful business in part by engaging in "false and deceptive advertising practices" in its marketing and advertising materials that are designed to "discourage customers from applying for federal grant and loan aid, and to make the company's loans appear to be a preferable alternative."

When first contacted Wednesday, company officials said they had not yet seen a copy of the complaint and therefore could not comment on it. After being provided with a copy of the document, a spokesman, Tom Calcagni, said its officials were reviewing the specific accusations in the complaint but could not comment on them at this point.

He added, however, that officials at EduCap/Loan to Learn thought it was "somewhat inappropriate that [the student association] didn't make an effort to contact us to discuss the matter with us directly" before complaining to the trade commission. Calcagni also said the company, in its 20 years in business, "has helped innumerable students and their families during that period, and also has a very, very good working relationship with the financial aid community." EduCap had run the marketing materials in question by college financial aid directors.

Loans from non-federal sources have exploded in recent years as tuition costs have soared, grant aid has stagnated, and some students have hit their caps on the amount of federally subsidized loan funds they can borrow. In a paper presented at an American Enterprise Institute conference on student loans this week, Joseph Williams, author of Cheating Our Kids: How Politics and Greed Ruin Education, quoted the company's founder, Catherine B. Reynolds, as saying that her company has proven that one can "do well by doing good." (Reynolds was a member of the Secretary of Education's Commission on the Future of Higher Education, which included and then dropped a provision encouraging the use of private loans from its final report.)

Williams posited: "If you believe the widely held notion that earning a college degree is itself an investment in one's own human capital, ... it can be argued that EduCap has made such an investment possible for thousands of Americans who might otherwise have found themselves with few affordable higher education options."

In its complaint, the student association paints a different picture. It suggests that Loan to Learn, in a handbook called "Demystifying Financial Aid" that the company posts on its Web site and distributes to prospective borrowers, actively and misleadingly tries to dissuade students from options that would be more affordable for them, especially federal grants and loans. ( Another paper presented at this week's AEI conference, by Richard Lee Colvin of the Hechinger Institute at Columbia University's Teachers College, says that Loan to Learn charges some students interest rates of up to 19.37 percent.)

The student association cites several charts, tables and statements in the Loan to Learn materials that it describes as false and deceptive. Among the most significant are statements that:

• Private loans can "be used for any education-related expense, including those not covered by most federal aid (computers, books, transportation)." "This is false," the student association says. "All of the federal financial aid offered by the U.S. Department of Education can be used for computers, books, and transportation as well as other costs related to college. Some IRS tax credits and deductions," the student group notes, "apply only to tuition and required fees."
• "[M]ost government loans are need-based." False, USSA says: "All college students are eligible for federally backed loans, regardless of need."
• Private loans carry more flexible terms. "The federal loan programs provide for deferments and forbearance for many exigencies, flexibility not generally provided by private loans."

The student group's complaint also takes issue with two charts contained in the Loan to Learn document.

One bar chart -- under the title "Private Loan Volume Compared to Other Selected Types of Federal Financial Aid" -- compares the $13.8 billion in private student loan volume in 2004-5 to the $7 billion in PLUS loans, $1.3 billion in Perkins Loans, and $1.2 billion in Federal Work Study funds distributed that same year. Missing, notably, is the more than $50 billion in other federally backed loans held that year.

"The chart is designed to make it appear that taking out private loans for college is not only common but the dominant practice for American families," USSA says. "This is false: private student loans are growing, but are neither common nor dominant."

The other chart -- "Gap Between Federal Aid and Cost of Attendance in the Freshman Year of College" -- pegs the "Average Cost of College" at $31,916, and the "Federal Aid Limit" at $2,625, suggesting that most students would have a $29,291 gap between what they must pay and what the federal government will give them.

But there is no such "federal aid limit," the student group asserts. "The $2,625 figure is the first-year limit on Stafford loans for dependent students. But students, even in the first year, can take out federal PLUS (parent) loans, and may be eligible for Pell Grants or other federal aid. Students may also receive aid from the institution, state and other sources." Additionally, only in smaller type does the company note that the hefty figure it cites for the cost of college applies to a private four-year institution, while the vast majority of students attend public two- and four-year colleges.

"With prominent advertisements on the U.S. News college guide site, the company is aggressively encouraging students and parents to take out high-interest private loans of up to $50,000 per year," the student association concludes. "The company's false and deceptive practices need to be stopped immediately, before any more families are victimized."

Officials at the Federal Trade Commission did not return messages seeking comment.