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Republican Leaders Request GAO Investigation into Direct Loan Program

Dear Mr. Dodaro:

On March 27, 2012, we requested the Government Accountability Office examine the U.S. Department of Education’s oversight into the Direct Loan rehabilitation process for defaulted borrowers. Since that time, we have received numerous troubling complaints from borrowers whose financial information and payments were lost by the department, who were put into forbearance without being told, and whose loans were moved to a new servicer without notice.

Recent news reports have highlighted additional problems with the Direct Loan program, leaving policymakers, financial aid administrators, and students questioning whether the department has the capability to protect borrower privacy and effectively administer the student loan program. For example, Inside Higher Ed recently published reports of a second data breach in which certain borrowers received financial information of other borrowers. The first breach, which took place October 2011, was similar in nature and affected at least 5,000 borrowers.  Diverse: Issues in Higher Education also recently pointed out the department changed the criteria it uses to determine credit-worthiness in the PLUS loan program without providing notice to borrowers. The article notes that because of this change, many students at Historically Black Colleges and Universities were left struggling to figure out how to finance the rest of their education.

To read the full letter, click here.

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