With scandal rattling the $85 billion student loan industry, Education Secretary Margaret Spellings argued at a House hearing on Thursday that she lacked legal authority to clamp down on many abuses.Ms. Spellings faced pointed questioning at the hearing from Congressional Democrats, who accused her department of mismanagement and complacency.
In about three hours of testimony before the House education committee, Ms. Spellings portrayed her department’s oversight of federal lending programs as vigorous, but said that the world of private lending, which has become increasingly important as college costs have outstripped federal loan programs, was mostly beyond her regulatory authority.
She told the panel that the entire student loan system needed overhaul, saying, “The system is redundant, it’s byzantine and it’s broken.”
Several Democrats, led by Representative George Miller, questioned her aggressively, asserting that she had regulatory power and moral influence that she had neglected to wield to stop loan companies from paying universities or giving gifts, trips, stock and consulting payments to the university financial aid officers who guide students toward loans.
This from the New York Times.
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