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Like Halliburton, Bush Administration gave pass to student lender 'friends,' says top Democrat
Michael Roston
Published: Wednesday April 18, 2007
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While calling for the Department of Education to undertake a set of emergency reforms in collegiate student lending around the country today, a top House Democrat warned that the private student loan industry was as bad as Halliburton and assailed the Bush administration for ignoring its activities.

"This is the [modus operandi] of the Bush administration they never took a look at their friends, whether it's Halliburton in Iraq, contractors in Hurricane Katrina, or Vice President Cheney and the oil companies," said Rep. George Miller (D-CA), Chairman of the House Committee on Education and Labor. "Now it's the lenders."

Miller was speaking during a conference call in which he called on Secretary of Education Margaret Spellings to enact a set of emergency reforms as a response to what is seen by many as a growing scandal in the federal higher education student loan program. He warned that under the Department's watch, the program was "spinning out of control."

"It's time for the Secretary of Education to step up, and take responsibility for the entire program," Miller added. "If Secretary Spellings fails to do this, what is happening is that she is allowing a corruption surcharge to fall on every student borrower and their families."

The nation's student loan industry has come under intense scrutiny recently, after New York Attorney General Andrew Cuomo "uncovered numerous arrangements that benefited schools and lenders at the expense of students," according to the Associated Press. "For example, investigators say lenders have provided all-expense-paid trips for college financial aid officers who then steered students to the lenders."

Additionally, a Department of Education student loan official, Matteo Fontana, was shown to have $200,000 in stock with the former parent company of one major lender, Student Loan Xpress.

Miller is calling on the Education Department to enact an emergency plan to ensure "that the federal student loan programs are operated to the maximum possible benefit of students, families, and taxpayers," according to a fact sheet released to RAW STORY:

1. Imposition of a moratorium on use by university and college financial aid office's of 'preferred lender' lists.

2. Clearly define and end all bribes paid by lenders.

3. Require full disclosure and end to all institution-lender conflicts of interests.

4. Launch Inspector General oversight of all Department of Education employees.

Miller is also seeking all public records of meetings between student loan industry representatives and Education Department political appointees.

The Education and Labor Committee chairman praised Spellings for suspending access by lenders to a database of all students using the federal Direct Loan program, but said a full investigation had to be launched into how the database had been used.

"Under the law, there is legitimate access to the database on the basis of identifying specific students to determine their eligibility for various student loan programs," Rep. Miller said. "But people were trolling through this database to get names of students and their backgrounds so they could promote private lending [and remove students from the federal Direct Loan program], or for some other purpose, to sell it to someone."

Miller suggested that the misuse of the database might have been an invasion of privacy.

"The student loan database is there for the benefit of the student loan program, and while it's a rich environment for other uses, neither students nor families signed up for those other purposes," he said. "It may be a flat out violation of their privacy rights."