Whistle-Blower On Student Aid Is Vindicated

[Hissyspit]

Source: Washington Post

Whistle-Blower on Student Aid Is Vindicated

By SAM DILLON
Published: May 7, 2007
WASHINGTON — When Jon Oberg, a Department of Education researcher, warned in 2003 that student lending companies were improperly collecting hundreds of millions in federal subsidies and suggested how to correct the problem, his supervisor told him to work on something else.

Jon Oberg, a former Department of Education researcher, warned that student loan companies were abusing a subsidy program and collecting millions in federal payments to which they were not entitled.
The department “does not have an intramural program of research on postsecondary education finance,” the supervisor, Grover Whitehurst, a political appointee, wrote in a November 2003 e-mail message to Mr. Oberg, a civil servant who was soon to retire. “In the 18 months you have remaining, I will expect your time and talents to be directed primarily to our business of conceptualizing, competing and monitoring research grants.”

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The story of Mr. Oberg’s effort to stop this hemorrhage of taxpayers’ money opens a window, lawmakers say, onto how the Bush administration repeatedly resisted calls to improve oversight of the $85 billion student loan industry. The department failed to halt the payments to lenders who had exploited loopholes to inflate their eligibility for subsidies on the student loans they issued.

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Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate education committee, has asked Ms. Spellings to turn over documents related to the settlement decision. She is likely to come under questioning about the Nelnet settlement on May 10, at a hearing of the House education committee.

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Read more: http://www.nytimes.com/2007/05/07/washington/07loans.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1178507068-11pXYdmiwWoAXK7WmZk4nw

[Hissyspit]

1. Here is Mr. Oberg:

"Mr. Oberg, now retired, has a master’s degree from the University of Nebraska and a doctorate in political science from the Free University of Berlin. He is a former Navy officer, university professor, and aide to Senator J. James Exon, a Nebraska Democrat, from 1979 to 1984. He was an Education Department liaison to Congress under the Clinton administration."

http://www.imgred.com/

Jon Oberg, a former Department of Education researcher, warned that student loan companies were abusing a subsidy program and collecting millions in federal payments to which they were not entitled. Michael Temchine for The New York Times

[flyarm]

2. bee geebus..they have every damn way possible to steal our money!! those sob's

here we think..well we pay taxes so kids can go to school and get all the education they want and need to keep this country viable..and yet these sob's have stolen not only our money..but the heart of this country..our kids...i guess if the kids can't get loans they will join pissy pants military ..won't they?????????

this is pissy pants draft!!

shaking head here..

fly

[ClintonTyree]

3. The military or....

that cheap labor work force the Republics so desperately want to keep their corporate pals rolling in the money. It astonishes me how low those in the Bush administration will stoop to steal the taxpayers', parents' and students' money. A den of thieves, one that needs to be destroyed quickly. :grr:

[JoFerret]

7. Republican ethics: Put GOP foxes in charge of every henhouse

In situation after situation the oversight has been missing. Our money, our health, our lives, (our pets' lives) and our futures are open season for these thieves and knaves.

[rodeodance]

4. She is likely to come under questioning about the Nelnet settlement on May 10,

The department now says it did not fully understand the extent of the maneuvers the loan companies were making to get the subsidies until last September, when its inspector general investigated and issued a report detailing manipulations carried out by a Nebraska lender, Nelnet. The audit recommended that the department recover $278 million from the lender, but education officials instead reached a settlement allowing Nelnet to keep the money but cutting it off from further subsidies that it claimed it was eligible to receive.

Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate education committee, has asked Ms. Spellings to turn over documents related to the settlement decision. She is likely to come under questioning about the Nelnet settlement on May 10, at a hearing of the House education committee.

Mr. Oberg, now retired, has a master’s degree from the University of Nebraska and a doctorate in political science from the Free University of Berlin. He is a former Navy officer, university professor, and aide to Senator J. James Exon, a Nebraska Democrat, from 1979 to 1984. He was an Education Department liaison to Congress under the Clinton administration.

The subsidy payment issue that came to preoccupy Mr. Oberg grew out of decisions Congress made in the 1980s to ensure that low-cost student loans were available at a time when the economy was souring. Lawmakers guaranteed nonprofit lenders a rate of return of 9.5 percent on student loans that were financed by tax-exempt bonds to protect the companies from spiraling costs.

[rodeodance]

5. Ms. Spellings did not reply to a memorandum Mr. Oberg sent her

Mr. Whitehurst, in an interview, suggested that Mr. Oberg was viewed by some senior officials as an annoyance. “I was told he was like a dog on a bone, agitating on this issue,” Mr. Whitehurst said. Ms. Spellings did not reply to a memorandum Mr. Oberg sent her about waste in the loan program just before his 2005 retirement, Mr. Oberg said.

But Mr. Oberg’s warnings prompted a clamor in Congress and a string of reports by government investigators calling for a stop to the giveaways. Senior department officials disputed or declined to follow the recommendations of all of them.

A 2004 report by the Government Accountability Office urged the department to rewrite its regulations to save billions of dollars in future loan subsidy payments. But Ms. Stroup, who had once worked for one of the lending companies that is now under investigation for the subsidies, argued in response that it would be simpler for Congress to clamp down with new legislation. Mr. Paige repeated that argument in a letter to Mr. Kennedy, who was pressing the department to curb the subsidies.

Then, in 2005, the Education Department’s inspector general recommended that $36 million be recovered from a New Mexico lender. Ms. Spellings overruled the finding that the payments were improper and declined to recover the payments. And in January 2007, after the inspector general recommended that $278 million in overpayments be recovered from Nelnet, the department instead reached a settlement under which Nelnet could keep the money — if it dropped plans to bill the department for another $800 million in subsidies.

[Hissyspit]

6. .