U.S. Department of Education Conducted Sham Investigation of Student Loan Giant, Navient!

Dear Commons Community,

The U.S. Department of Education conducted a sham investigation into allegations that student loan giant Navient Corp. violated its lucrative government contract, leading the Obama administration to mislead the public last year when it proclaimed the company didn’t cheat service members on federal student loans, according to an audit by the department’s inspector general released yesterday.  And thanks to the department, which had contradicted federal prosecutors with its announcement, Navient not only kept its contract — it got a raise, too.  As reported in The Huffington Post:

“The scandal is likely to revive concerns about the department’s sloppy policing of the student loan industry and its cozy relations with loan contractors, many of which have employed former department officials. These contractors together receive about $800 million annually from taxpayers to collect borrowers’ monthly payments and counsel them on their repayment options.

The inspector general’s findings also could complicate the Obama administration’s efforts to convince the Senate to confirm acting Education Secretary John King Jr. for the post. President Barack Obama has repeatedly pushed the department to improve its oversight of loan contractors and their treatment of borrowers. The department, however, has renewed contracts with companies that its own investigators and other federal authorities determined had misled borrowers. Accountability has been rare.

“Today’s report is a stunning indictment of the Department of Education’s oversight of student loan servicers, exposing the extraordinary lengths to which the department will go to protect these companies when they break the law,” Sen. Elizabeth Warren (D-Mass.) said in a prepared statement.”

President Obama has done a lot of good things as president but the U.S. Department of Education under Arne Duncan’s leadership will be a blot on his legacy.


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