STATE PIRGs' HIGHER EDUCATION PROJECT

FOR IMMEDIATE RELEASE: September 29, 2006
FOR MORE INFORMATION: Luke Swarthout (202)546-9707
Department of Education: Private Lender Bilking Taxpayers for Billions

Statement of Luke Swarthout, State PIRGs' Higher Education Advocate

"According to a new OIG report released late Friday by the Inspector General (IG) of the Department of Education, private lender Nelnet Inc. abused a student loan loophole to generate $1.2 billion in illegitimate government payments. Through the "9.5% loophole" the company has already been paid $278 million in excess subsidies and stands to receive $882 million more unless the Department steps in. The IG report calls on the Department to stop the payments and repay the outstanding $278 million.

The Department of Education must stop this abuse of taxpayers at the hands of private student lenders. Citizens pay taxes to help students go to college, not to pad the profits of private lenders."
###