Still No System To Detect Lender/School Misconduct, Says Report

Angela Januzzi

August 2, 2007 

The federal Department of Education has been officially found as offering no “oversight tools” as of yet to detect misconduct between loan companies and higher education institutions.  

The report, researched by the Government Accountability Office, states that the Department of Education has not yet developed a format for determining if lenders are working with schools to inappropriately limit students’ loan choices. A

Also, the report concluded that a large portion of students have been encouraged to use loans with unnecessarily high interest rates and little borrowing benefits. In a letter to the GAO from the department, basic efforts were outlined for immanent implementation, such as an appointed “workgroup” to oversee lender compliance with the law. However, such proposed rules will not go into effect into 2008. 

Attorney General Andrew Cuomo, coincidentally, who first publicized the student loan scandals this past spring, announced yesterday that he would be furthering his investigations into lender and school misconduct.