In an effort to distance itself from a national controversy over loan companies paying colleges for preferred status, the University Alumni Association on April 26 terminated a contract that provided JPMorgan Chase & Company access to its mailing list, a statement from the association said.

New York attorney general Andrew Cuomo, who is leading an investigation of lenders' relationships with colleges, announced May 3 that the inquiry would extend to college alumni associations.

Cuomo's office is sending 90 subpoenas to alumni associations of universities nationwide questioning their connections to lenders, the announcement said.

Last April, the University's alumni association agreed to send its members a letter promoting Chase's loan consolidation plan for a yearly minimum fee of $25,000.

The yearly payment the association received from Chase increased depending on the number of students who signed on to the plan endorsed in the association's letter, said Jerry Sigler, vice president of the association.

He said Chase paid for the expense of the mailing.

Association officials approached the loan company with concerns about their arrangement after colleges' relationships with lenders came under scrutiny, Sigler said.

The association hadn't yet decided to leave the contract before talking with Chase, but during the conference both sides agreed it was best to end their affiliation, Sigler said.

Chase spokesman Tom Kelly told The New York Times that Chase was ending similar relationships with other schools by April 15 because the company had signed a code of conduct developed by Cuomo, which it believed prohibited such arrangements.

Sigler said the association didn't think its arrangement with Chase was illegal or unethical, but that the association didn't want to be connected to the "preferred lender" scandal.

"Because of the potential perception that there was something wrong, because of so much public scrutiny, it's better from a PR standpoint to distance ourselves from it," he said.

But Sigler said the association was looking after its members' interests when it partnered with Chase because recent graduates should be informed about the benefit of loan consolidation.

He said alumni are more likely to read about loan consolidation if the information came from the association rather than through promotional mail from banks.

"What alumni said they appreciated was that it heightened their awareness that they should be doing this," he said. "It was sharing information in a way that it's more likely to get read."

The association entered the agreement with Chase because of the positive feedback other alumni associations received from their members for similar programs, Sigler said.

Because loan consolidation interest rates are fixed by the federal Department of Education, the association reasoned that the arrangement didn't exploit the trust of its members by encouraging them to sign plans with higher rates, Sigler said.

He also said no one complained to the association about its practice and some alumni have told him they appreciated the lesson in loan management.

It would be too expensive for the association to continue informing alumni about loan consolidation through mailings of its own, he said.

Cuomo and the University

In February, New York attorney general Andrew Cuomo's campaign asked the University for its financial records in order to determine that the University was not receiving payment from lenders.

After the inquiry found no fault, the University was asked to sign Cuomo's code of conduct that prohibits administrators from collaborating with lenders, University spokeswoman Kelly Cunningham said.

The University refused to sign the document because the investigation determined the University hadn't done anything wrong, Cunningham said.