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Watchdog: Education Department misled public about student loans

By Amy R. Connolly   |   March 3, 2016 at 3:10 PM
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WASHINGTON, March 3 (UPI) -- The U.S. Department of Education conducted a flawed review of how its student loan servicers charged military personnel and knowingly published misleading information about the findings, an inspector general report found.

The inspector general raised concerns about a 2015 review of the department's loan servicers over questions the four main companies had been overcharging servicemembers for interest on their student loans. The review found the company generally followed the rules governing reduced interest-rate benefits for some service members, finding "in less than 1 percent of cases, borrowers were incorrectly denied the 6 percent interest rate cap required by the laws." But that was not the case, the inspector general found

The inspector general said the results were "unsupported and inaccurate." The department used an inadequate sample of loans to come up with a conclusion and it "did not consult with or use a statistician to assist with designing the sample it used in its program reviews," the inspector general found.

The inspector general's comments follow a request by Democratic Sens. Patty Murray, Elizabeth Warren and Richard Blumenthal for the inspector general to review the department's findings.

"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," Warren said.

"The thousands of servicemembers who were cheated deserve far better, ‎and these findings raise serious questions about whether the department and its Office of Federal Student Aid can be trusted to protect the millions of borrowers under its care. We need to get to the bottom of how this happened -- and who allowed it to happen -- to ensure that it never happens again," she said.

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