NY Atty General Andrew Cuomo testified before the House Education and Labor Committee during an investigative hearing today, saying Secretary of Education Margaret Spellings "has defaulted on her obligation" to oversee the $85 billion student loan industry, and that his investigation should lead to criminal charges.
Spellings herself will testify before the committee May 10, says George Miller's office. It ain't Alberto Gonzalez, yet, but stay tuned.
Good Q&A on NPR, primer on the issue (transcript) with Kelly Field of the Chronicle of Higher Education.
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4 comments:
Over at CollegeLoanSearch we completely agree...to a point. Yes, the Dept of Ed was "asleep at the switch". But we also think the Dept of Ed is in waaaaay over their heads. What the heck does an Education policy executive branch know about regulating a financial services function? We think they know very little about such things.
http://college-loan-search.blogspot.com
hmm. Good point. Well what the heck does the USDA know about hogs? Those damn bureaucrats better not meddle in things they can't ever understand. Better to leave matters to the big corporations without all this pesky oversight.
USDA does not own farms that produce food for market.
Do you trust the private sector to do anything? What in your opinion does the private sector do well?
This sidebar dialogue here does not speak to the DL-FFEL debate, because DL is arguably more of a private sector program than FFEL in that it is run by private sector contractors, while DoE delegates FFEL oversight to State Guaranty Agencies. A cursory review of block grant programs sadly indicates mismanagement at the State level which dwarfs the Federal mismanagement. More to the point, one could make a strong argument that, due to changes in the financial markets which have occurred since the enactment of the GSL Program -- such as securitization -- it is possible to go to 100% alternative loans, possibly run by not-for-profit organizations. The restoration of a full tax deduction for student loan interest would lend even more heft to the argument that both FFEL and DL are no longer necessary. Securitization, by allowing lenders to package, for example, loans from USC with loans from Bob's Beauty School, significantly reduces the challenge faced before GSL, that banks would only lend at schools which seemed to have little to no risk.
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