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October 20, 2007
Student loan scandal at the Department of Education made worse by "confusion"
Amit Paley's story Confusion Cited In Overpayments To Student Lenders in today's Washington Post details the long-running machinations over at the Department of Education concerning the Brobdingnagian student loan scandal that cost taxpayers hundreds of millions of dollars while unjustly enriching student lenders. The story points out that "Some inside the department sounded alarms," which were apparently ignored at headquarters by Education Secretary Margaret Spellings. "I have come across what appears to be significant federal waste," department researcher Jon H. Oberg wrote in a 2003 memo to agency officials. "I estimate it amounts to about $30,000 per day, perhaps more." Worse, the story goes on to say that, "Spellings said the agency has no plans to conduct audits to calculate a total loss," even though the excess payment kept by just one lender, NELNET, is known to be $278 million. "I don't know if it's a knowable number," she said. "I guess it's knowable by somebody. But my inspector general doesn't know it, to my knowledge. And I don't. We haven't found out." The story cites several finance and education loan experts who state that data the department has, and which it provided the Post, could be used to calculate a "rough estimate of the potential cost to taxpayers." I guess the Bush Administration doesn't know, or care. I'm confused.
In September, Congress passed, and the president signed, without inviting us, PIRG-backed legislation eliminating the subsidies and reforming the program (previous blog).
Posted by Ed Mierzwinski at October 20, 2007 10:32 AM
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