Whistleblowers, Oversight and Student Loans

Sam Dillon, New York Times - May 7, 2007

When Jon Oberg, a Department of Education researcher, warned in 2003 that student lending companies were improperly collecting hundreds of millions in federal subsidies and suggested how to correct the problem, his supervisor told him to work on something else.

The department "does not have an intramural program of research on postsecondary education finance," the supervisor, Grover Whitehurst, a political appointee, wrote in a November 2003 e-mail message to Mr. Oberg, a civil servant who was soon to retire. "In the 18 months you have remaining, I will expect your time and talents to be directed primarily to our business of conceptualizing, competing and monitoring research grants."

For three more years, the vast overpayments continued. Education Secretary Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act. Then this past January, the department largely shut off the subsidies by sending a simple letter to lenders -- the very measure Mr. Oberg had urged in 2003.

The story of Mr. Oberg's effort to stop this hemorrhage of taxpayers' money opens a window, lawmakers say, onto how the Bush administration repeatedly resisted calls to improve oversight of the $85 billion student loan industry. The department failed to halt the payments to lenders who had exploited loopholes to inflate their eligibility for subsidies on the student loans they issued.

Recent investigations by state attorneys general and Congress have highlighted how the department failed to clamp down on gifts and incentives that lenders offered to universities and their financial aid officers to get more student loans. Under this pressure, the department is now seeking to set new rules.

Democratic Caucus Chairman Rahm Emanuel responded to this story:

"This Administration has privatized our government for the benefit of corporations. From student loans to Medicare to civil rights enforcement, private interests consistently trump the public interest. It's time for Congress to shut down this special-interest bazaar."

The story highlights how both Congressional oversight and whistleblower protections are necessary to root out waste, fraud, and abuse in government.

See our coverage of Congressional oversight on student loans >>

See our coverage of the whistleblower protections >>

Oversight Committee Chairman Henry Waxman led debate on the Whistleblower Protection Enhancement Act of 2007:

"There are a lot of federal officials who knew the intelligence on Iraq was wrong officials in the C.I.A. and the State Department knew that iraq did not try to import uranium from Niger. Officials in the Energy Department knew the aluminum tubes were not suitable for nuclear centrifuges...It is imperative that national security employees be protected against retribution so they will not be afraid to report national security abuses to members of Congress."