NEW YORK (AP) — Eight student loan companies agreed to adopt a code of conduct that bans deceptive marketing practices — such as offering prizes to students who sign up for loans — following an investigation by the state of New York, the state attorney general said Tuesday.

Seven direct-to-student lenders agreed to pay a combined $1.4 million to settle the probe, Attorney General Andrew Cuomo said. These companies employed bait-and-switch tactics, pushed higher-interest private loans and marketed products so they appeared to be federal loans, he said.

Federal loans have fixed interest rates that are often lower than private loans.

The companies that are settling were identified by the attorney general's office as Nelnet Inc., Campus Door Inc., GMAC Bank, NextStudent Inc., Xanthus Financial Services Inc., EduCap Inc. and Graduate Loan Associates LLC.

An eighth lender, MRU Holdings Inc., was not a target of the investigation but voluntarily agreed to adopt the reforms. MRU Holdings, operating as My Rich Uncle, "wholeheartedly endorsed" the code of conduct, said Raza Khan, president and co-founder of the company.

MRU Holdings, based in New York City, has advocated more transparency in the industry for more than a year, Khan said.

Nelnet spokesman Ben Kiser said changes in the company's practices will occur in stages. Nelnet, based in Lincoln, Neb., should be fully compliant with the code of conduct by December.

EduCap, based in McLean, Va., issued a statement saying it welcomes "the opportunity to embrace the attorney general's proposed code of conduct."

A call to GMAC Bank was not immediately returned. A phone number listed on Graduate Loan Associates' Web site was not working and phone numbers could not be immediately found for Xanthus Financial or Campus Door.

Direct-to-student loan companies market to consumers online and through the mail, and don't necessarily have an on-campus presence.

The new code of conduct bans practices including:

—Using logos that make mailings appear to be from the federal government

—Paying students to get their friends to take out loans

—Offering prizes such as iPods, gift cards and GPS devices to induce students to take out loans with a particular lender

—Advertising interest rates that are not available to a majority of borrowers