The federal Department of Education, after months of criticism for lax oversight of the student loan program, still has no system to detect and uncover misconduct by lenders and protect student borrowers, a new government report said yesterday.
The report, by the Government Accountability Office and released by Congressional Democrats, found that the department had “no oversight tools” to see whether lenders were giving improper incentives to colleges to steer student borrowers their way, and, that since 1989, the department had offered lenders no “comprehensive guidance” on what incentives might be forbidden. In 20 years, the report found, the department has tried to punish only two lenders for violating government rules.
The department does not have a way to find out whether universities are improperly limiting students’ choice of lenders, according to the G.A.O., the government’s main research arm.
The report, the agency’s first since revelations of potential misconduct in student lending this year, said the department’s lack of oversight of federal student loans “may have resulted in some students taking loans with higher interest rates or fewer borrower benefits.” Over all, the report portrays an agency that may at times react to outside complaints, but does not “proactively detect” problems...
This from the New York Times.