Tuesday, May 01, 2007

Bush Administration Refused To Regulate Unethical Student Loan Industry Practices

Here's another example of an industry getting to regulate itself in the Bush-era:

The Bush administration killed a proposal to clamp down on the student loan industry six years ago following allegations that companies sought to shower universities with financial favors to help generate business, according to documents and interviews with government officials.

The proposed policy, which Education Department officials drafted near the end of the Clinton presidency and circulated at the start of the Bush administration, represented an early, significant but ultimately abortive government response to a problem that this year has grown into a major controversy.


The abandonment of the 2001 proposal underscores what some consumer advocates and Democratic lawmakers believe is lax federal oversight of the financial aid system by a department they say is too cozy with the industry. More than a dozen senior department officials either previously worked in the student loan business or found high-paying jobs in the sector after they left the agency.

"The Department of Education has been run as a wholly owned subsidiary of the loan industry under this administration," said Barmak Nassirian, a longtime advocate for industry reform at the American Association of Collegiate Registrars and Admissions Officers. "They are running the federal loan program for the profit of their friends and not for the benefit of students and taxpayers."

Here's my favorite part of the article. When Clinton-era Education Department officials sought to draft regulatory rules about quid pro quo financial relationships between student loan lenders and universities that created exploitative advantages, a Bush appointee killed the proposals, saying :

"We were like, 'No, we're not going to drop a bomb on the lending community with these wacko ideas,' " said Jeffrey R. Andrade, a senior Education Department official at the time who now works for a loan company.

Regulation is a "wacko idea."

Sure it is - if you're part of the industry that's being regulated and you don't want your sweetheart deals, exploitative relationships and predatory lending practices exposed to public view.

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