A New Student Loan Scandal

By Bryan O'Keefe

The latest salvo in the student loan scandal comes from yesterday’s Washington Post. The Post detailed how private student lenders are supposedly illegally accessing a government database on student borrowers and using the information obtained through the access to market their loan products to students. There seems to be some disagreement as to how prevalent the practice is – at one point the story says that security has been tightened, but it also claims that the information is still being accessed and that the department is considering shutting down access altogether.

This is one student loan scandal where the author has some personal experience. Just about every other day, I receive in the mail a new advertisement from Student Loan Company XYZ asking me to transfer all of my private loans to their service, that they offer the best interest rates, blah blah. What’s interesting is that the letters have continued pretty much non-stop even after I recently moved to a new address – while most of my other junk-mail has tapered off a bit.

Now, I have no evidence that private lenders have accessed my information in the Ed department database, but it wouldn’t surprise me. They are obviously getting addresses and loan information from some source and the Post’s story seems to make a strong case for the government database as being the culprit.

What’s befuddling to me is that if the government recognizes that this shouldn’t be going on, how hard is it to really stop it? For a department with such a large budget, you would think that they could easily design a database and ensure that only the right people have access to it. Perhaps that is asking too much of government, unfortunately.

This development is also bad news because it casts some doubts on other data collection ideas that would probably be of tremendous value. From the get-go, some folks have said that we should not gather more data on student performance in higher education because of privacy concerns. I thought that it wasn’t a false choice and that the government could collect more data but also make sure that it was used appropriately. But when you read the Washington Post story, you see that might not be the case, at least with our current security procedures.

Here's hoping that the Department of Education can find out a way to stop this invasion or privacy and better protect sensitive student data.