Department Of Education: Student Loan Oversight Is Overrated

Remember that whole student loan scandal, where lenders illegally gave gifts to financial aid officers? The Department of Education doesn’t! A damning GAO report claims that the DOE:

…has no oversight tools in place designed to proactively detect potential instances of lenders providing improper inducements–such as gifts to schools in exchange for preferred status on a school’s suggested lender list–or schools limiting borrower choice of lender, two activities that are prohibited by law. Instead, the department primarily depends on external complaints to identify potential instances of non-compliance with these prohibitions.

Over the past twenty years, the DOE has sanctioned two (2) lenders for violating government rules. As a result, students are subjected to higher interest rates and fewer borrower benefits.

The DOE does not dispute the report’s accuracy.

US not policing college lenders, GAO says [Bloomberg]
Federal Family Education Loan Program: Increased Department of Education Oversight of Lender and School Activities Needed to Help Ensure Program Compliance GAO-07-750 [Government Accountability Office]
(Photo: Daveybot)

Comments

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  1. Cowboys_fan says:

    I say make college free for all.

  2. hustler says:

    Is anyone suprised at this point? We all know the Bush whitehouse is responsible for nothing, at least the “do not recall” any responsibility assignment meetings.

    Why do you hate freedom?

  3. TechnoDestructo says:

    Wow, I was expecting this would be a Bush administration problem, but I guess it’s older/bigger than that.

  4. TechnoDestructo says:

    Whoops…or maybe not, since for half those 20 years Sallie Mae was not a private entity.

  5. vdragonmpc says:

    You know what is awesome about this? All the bush-bashers and whiners can CHOKE ON THE FACT THAT SALLIE MAE WENT PRIVATE UNDER CLINTON!!!

    Bush has had NOTHING to do with lenders raping students and families. These laws were pushed through congress not the office of the president.

    I still think the loan industry needs to be rolled back into the Fed as they pay these ‘lenders’ whether the borrower repays or not. Its a no risk investment.

  6. pdxguy says:

    more cat pictures please!

  7. orielbean says:

    They should use the same system as we do in finance when dealing with people who work around investments and securities. You attend a yearly compliance session, sign off stating that you didn’t accept gifts over 100.00 from a client or outside partner/vendor. If you did, you must report it and return it if necessary.

    If you are found to have violated this, you are stripped of your right to work with investments/securities, and the fine/charges are proportional to the errors, oversights, or crimes you committed.

    Much like our failed system to police employers that hire illegal immigrants, the loan system here refuses to enforce laws in place, or they refuse to implement a workable system.

    In both cases, enforcement is the only thing that works to control the shitheads with the purse-strings.

  8. forever_knight says:

    fewer cat pictures please!

  9. pestie says:

    Cat pictures kick ass! Moar!

  10. DadCooks says:

    Yes, this is a bit off topic but IMHO the whole Student Loan situation is a big fiasco!

    Not only no oversight, but ALL the lenders flagrantly violate the Do Not Call Laws.

    We “opted out” of all contact, but continue to get calls and junk mail!

    I had no idea that the Student Loan system was soooo screwed up. The Lenders have virtually no debt exposure and feel that they can violate any law that they want.

    Paying off our loans as fast as possible and have complaint letters on file at the FTC and letters to my congrssional representatives.

  11. dbeahn says:

    @TechnoDestructo: “Wow, I was expecting this would be a Bush administration problem, but I guess it’s older/bigger than that.”

    Yeah, duh. This all started while President “I didn’t have sex with that woman” was in office. Apparently, along with no recalling the oral sex, he also forgot to recall setting in motion this huge kick-back machine to fuck students (you know, the ones that were in the 17-21 range but weren’t interns so he couldn’t fuck them personally) on their loans.

    Thanks Bill.

  12. Rusted says:

    If you can pay as you go, it takes longer, but that loan monkey won’t be a problem. Also higher cost of tuition doesn’t automatically mean higher quality. There are scholarships and such too. A few employers also pay some of the freight as well. @Cowboys_fan: No such thing as a free lunch here. Tuition or taxes, take your pick.

  13. Cowboys_fan says:

    @Rusted: Education, in a sense, can already be free, aside from that silly piece of paper. When I was in college 4 years ago, everything was on the internet anyways; courses required, lecture notes, required readings, assignments, everything. So if you have the knowledge to find the correct sites, the time and money for the books/equipment if not in the library, you can learn the exact same things, just no paper to prove it, at a substantially cheaper cost. Depending on the discipline, as obviously an electronics lab is expensive.

  14. BenMitchell says:

    @Cowboys_Fan

    You are wrong on this point. I already have the required education and knowledge. But my employer has made it clear to me that I must have that piece of paper in order to get the promotion that I’m seeking out of my current dept. Even my certifications are not enough, because they said that a four year degree also teaches business related skills and not just tech related ones that my certs provide.

    @Rusted
    I disagree (taxes or tuition) we can have a free lunch. It would simply require education be a not for profit institution vs a for profit one. This is something both School Officials and Banking Groups are lobbying against. You think it was Clinton who screwed the students, but it was a Republican congress at the time. Both parties are bought and paid for by the lobbyist groups long before they are ever elected by us.

    Schools would have to set substantially lower tuition rates and most colleges are not willing to do that. Why because the schools in this country are all about making money not improving the educational system.

    This would also require our lawmakers to stand up to the banking industry and tell then they will be losing tens of billions of dollars in revenue. Well guess none of that will be happening in my life time :P

  15. asherchang says:

    well that sucks.