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Archive for Friday, May 11, 2007

Justice investigates student loan payments

May 11, 2007

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— The Justice Department is reviewing an audit that found hundreds of millions of dollars have been improperly paid to a student loan company, House Education Committee Chairman George Miller said Thursday.

Miller, D-Calif., made the review public during a hearing in which he pressed Education Secretary Margaret Spellings on her decision to ignore a recommendation by her department's inspector general, John Higgins, to recover an estimated $278 million. It's the IG's audit that Justice is reviewing.

Spellings defended her decision not to recover the improper payments to the lender, Nebraska-based Nelnet, saying it was prudent to simply extract a promise from Nelnet that it would halt the practice, avoiding a costly lawsuit.

Spellings also traded barbs with Miller over allegations that the department's oversight of the student loan industry has been lax.

New York Attorney General Andrew Cuomo has been leading an investigation into the $85 billion-a-year student loan industry.

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