TESS VIGELAND: First came the allegations of sweet stock deals for financial aid officers and an official at the Department of Education. Then, stories about banks trolling through private student records in search of new customers.
Well today, key Democratic congressional leaders said enough. Marketplace’s Steve Henn reports on demands that the Department of Education make immediate changes to the federal student loan program.
STEVE HENN: Late last night, the Department of Education shut down lender access to its National Student Loan Database. The Department worried unscrupulous banks had been sifting through the confidential data and using it to aggressively market high-interest loans.
GEORGE MILLER: This program has had little or no oversight over six years.
Congressman George Miller is chairman of the House Education and Labor Committee. He say the program’s administrator were already under fire for failing to stop private lenders from quote “bribing” financial aid officers in exchange for student loan business.
MILLER: This is a case where, you know, people are working hard to borrow money on behalf of their children. Or students are borrowing and then they’re working real hard for years later to pay back these loans. And to have essentially a corruption surtax charged to them is outrageous. Just outrageous.
Today, in an attempt to route out corruption, Miller asked the Department of Education to take several additional steps — including imposing an immediate moratorium on so-called “preferred lender lists” at universities.
But not everyone sees the need for drastic action. Mark Kantrowitz is the publisher of FinAid.org, a website that helps students find loans.
MARK KANTROWITZ: Getting rid of preferred lender lists could potentially do more harm than good.
Kantrowitz says without these lists, many students would be operating in the dark. Instead, he says, shining a bright light of disclosure will clean up the industry without hurting students.
In Washington, I’m Steve Henn for Marketplace.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.