Audit: US Education Dept. failed to supervise loan management companies

Posted: Updated:
OLD WESTBURY -

A recently released audit of the U.S. Department of Education found that its student loan unit failed to adequately supervise the companies it pays to manage the nation's trillion-dollar portfolio of federal student loans.

Fiona Morgan will be graduating from SUNY Old Westbury with a degree in fine art, but it won't be the only thing with which she graduates.

"I am going to have a lot of debt," she says.

The inspector general's report says it found that loan-servicing companies failed to follow rules, which could cause “increased interest or repayment costs incurred by borrowers, the missed opportunity for more borrowers to take advantage of certain repayment programs, negative effects on borrowers' credit ratings, and an increased likelihood of delinquency or even default.”

The report is also critical of the Education Department's office of Federal Student Aid, saying it rarely penalizes loan companies that failed to follow the rules.

sorry to interrupt
your first 20 are free
Access to News 12 is free for Optimum, Comcast®, Spectrum Networks® and Service ElectricSM customers.
Please enjoy 20 complimentary views of articles, photos, and videos during the next 30 days.
you have reached your 20 view limit
Access to News 12 is free for Optimum, Comcast®, Spectrum Networks® and Service ElectricSM customers.
Please login or create an account to continue enjoying News12.
Our sign-up page is undergoing maintenance and is not currently available. However, you will be given direct access to news12.com while we complete our upgrade.
When we are back up and running you will be prompted at that time to complete your sign in. Until then, enjoy the local news, weather, traffic and more that's "as local as local news gets."