Is the Office of Federal Student Aid (FSA) a captured agency?
Consider these facts:
5. FSA fails, for years, to warn Congress about the astonishingly high default rate, thereby greenlighting the repeated and dramatic increases in the federal loan limits. College tuition skyrockets, along with national student loan debt levels.
6. A whistleblower who uncovered an illegal
used to bilk the government out of billions of dollars literally has
tosue the Department to get them to attempt to
recover this ill-gotten cash in lieu of the Department's
solution: to let the lenders decide how much they need to repay
9. During the same time period, when the corporate markets for securitized student loans comes under threat, FSA moves with lighting speed to design and implement a bailout for student loan companies, completing the process in a matter of months.
10. While the entire Federal lending system is overhauled to loan directly to students, the absence of core consumer protections, and the draconian collection powers given to the system remain unchanged Furthermore, the same private, predatory entities from the old program are given the same positions in the new system (as both servicer and collector), virtually guaranteeing that the same predatory dynamic will persist, and probably be exacerbated with these companies now having fewer channels available to make money.
11. The Department of Education booked $50 billion in profits from the federal student loan program in 2011.
12. StudentLoanJustice.Org members discovered in 2009 that the Ombudsman office for the Department of Education, supposedly an unbiased office meant to mediate disputes between borrowers and lending/servicing/collection companies, is actually staffed by private contractors who are under contract to one of the largest student loan collection companies in the nation!