YPSILANTI Mich.

Eastern Michigan University has returned more than $161,000 to a foundation affiliated with Sallie Mae. It's among lenders facing questions in a New York state investigation into agreements giving lenders better access to students in exchange for money or services.

School officials said the move was made to avoid the appearance of a conflict of interest in its lending practices. The funds had been earmarked for a variety of scholarships, The Ann Arbor News reported Saturday.

Officials also said the university will likely sever its agreement with Sallie Mae to operate a financial aid calling center for the Ypsilanti school.

New York Attorney General Andrew Cuomo's investigation into conflicts of interest in the industry has resulted in settlements with 12 lenders, including Citibank, Sallie Mae, JP Morgan Chase and Bank of America.

Fines paid by the companies will be used to educate students about financial aid.

The money Eastern Michigan returned was the unused balance of donations totaling $310,000, according to former university President John Fallon and Darryl Sczepanski, vice president for advancement.

Fallon, who was fired in July after the school was accused of covering up the dorm room rape and killing of a student, said the money arrived several years ago, before he became president.

Information from: The Ann Arbor News, http://www.mlive.com/aanews

- Associated Press

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