Fixing a Corrupt Student Loan Industry (Rep. George Miller)

With college costs skyrocketing in recent years, America’s students and families are borrowing more loans – and taking on greater amounts of debt than ever before – to help finance a college education. One of our top priorities in the new Congress is to make college more affordable, and to ensure that our nation’s federal student loan programs are working as intended: to help students and parents pay for college. Instead, ongoing investigations into the student loan industry have revealed that these programs are working to line the pockets of big lenders and banks, too often at the expense of students and taxpayers.

From the egregious conflicts of interest between lenders and schools to questionable stock holdings by the public officials tasked with running these programs, the scale of corruption within the $85 billion a year student loan industry continues to grow. The blame rests not just with the lenders and individuals who have exploited these programs for profit, but with this administration. As New York Attorney General Andrew Cuomo told our committee at a hearing last week, the Department of Education has been “asleep at the switch” when it comes to conducting oversight over these programs. Even worse, we have since learned that this administration was warned about these unethical practices as early as 2001, yet still refused to act.

There is no question that congressional action is urgently needed to restore the student loan programs to their rightful owners: students and parents. As our committee continues its own investigation, we will build on legislation introduced by House and Senate Democrats in February, the Student Loan Sunshine Act, to fully protect students and families from any abuses within the system.  Earlier this week, I called for the White House and the Education Department to turn over all e-mails and correspondence regarding the student loan programs. And just yesterday, our investigation expanded in a new direction by asking the Federal Trade Commission to look into the deceptive and unfair marketing practices used by lenders to target student borrowers.

Next week Secretary Spellings will testify before our committee about the Department’s oversight of both the federal student loan programs and the Reading First program. While it is long past time for this administration to start acting in the interests of hardworking Americans, this hearing will be a critical – and long overdue – step in demanding answers and accountability. America’s students, families, and taxpayers deserve nothing less.

For more information please visit the House Education and Labor Committee’s Website and its special page on their student loan investigation.