JPMorgan to stop payments to alum associations

JPMorgan Chase & Co. has agreed to stop making payments to more than 100 college alumni associations that allowed the company to market its consolidation loans directly to graduates, according to the Wall Street Journal.
The New York-based financial services company is the second to acknowledge such agreements as a result of an expanding investigation of student loan abuses by New York Attorney General Andrew M. Cuomo.
J.P. Morgan said that it sought access to alumni lists so it could get graduates to combine multiple loans outstanding into a single “consolidation” loan through its Collegiate Funding Service unit, according to the report.
Mr. Cuomo said that the deals were not properly disclosed to students.
Last week, Lincoln, Neb.-based Nelnet Inc., said it had similar programs with 120 alumni associations, adding that it believes that the agreements are appropriate, but remains under investigation by New York State, according to the report.
As part of his nationwide investigation, Mr. Cuomo has revealed payments by loan companies to colleges, aid officers and alumni associations that he believes have compromised financial advice to students and their families.
Thus far, 22 schools have agreed to a new “code of conduct” that prohibits gifts and other payments from lenders to schools.