The US Education Department announced to suspend lenders’ access to a government database that contains the personal financial information of millions of student aid applicants. The department was acting on concerns that loan companies or other marketers were inappropriately obtaining confidential personal information on potential borrowers. The move can be well translated as strongest reaction to a widening student loan scandal that has already drawn in loan companies and caused several universities to put their financial aid administrators on leave and review their dealings with lenders.
The temporary restriction was imposed when it was reported that some companies were found to have searched the data in ways that violate federal rules and on concerns raised about data mining and abuses of privacy of the 60 million students in the system. In a letter sent to the chairman of the Senate education committee, Education Secretary Margaret Spellings has said that the department and its inspector general will investigate unauthorized access to the database, known as the National Student Loan Data System.
Education Secretary Margaret Spellings also informed the chairman that the agency had blocked 246 users from the student loan industry thought to have engaged in inappropriate searches and thousands more deemed unqualified for access after previous security reviews. However, Department officials were already seeking the possibility to shut down access to the database for months, which contains sensitive personal and financial information.
The temporary shutdown will prevent lenders, loan holders, guaranty agencies and other industry-connected users from the database. But agency officials maintain that it would not affect students or schools. The department will also work to minimize any disruption in service, informed Spellings.
