Those kickbacks from education lenders to college financial aid officers– payments they’ve now agreed to stop under government pressure- may be the ugliest part of the student loan scandal. But they’re not the biggest part.
That would be the lenders’ receipt of millions in illegal government subsidies, a long-running practice that could have been stopped a decade ago, by lawmakers who chose to keep your tax money flowing to the loan companies. The findings of Jon Oberg,a whistle-blower inside the Department of Education, were ignored by Congress.
In 1997, the Clinton administration proposed legislation to eliminate all references to the subsidies from the Higher Education Act in an effort to rein them in. Mr. Oberg took the legislation to Sally Stroup, who was then serving as senior aide to the Republican chairman of the House education committee.
“Sally told me there was no way that language was coming out,” Mr. Oberg recalled. “She didn’t give a reason — just forget it.” Ms. Stroup, who went on to become an assistant secretary of education in the Bush administration, and who is now back as an aide on Capitol Hill, did not return several phone calls and messages left for comment.
Click the link above for fascinating reading about Oberg’s search for the facts, and how- even within his own department- his efforts to find out the truth ran into obstacles. The subsidies were started in the 1980s to ensure that college loan money would be available through bad economic times. But when the economy perked up, the perks for lenders kept on coming.
It makes you wonder how many other programs, ones most of us have never heard of, have outlived their usefulness, but still continue to swallow tax dollars by the millions, or billions.