Copyright© 2007 by School Services of California, Inc.

                                      Volume 20                   For Publication Date: April 13, 2007             No. 8

Student Loan Controversy Widens 

A general manager in the U.S. Department of Education’s (USDE’s) Office of Federal Student Aid, Matteo Fontana, has been placed on administrative leave following release of potential conflict of interest dealings. Fontana held stock in a student loan company at the time he helped to oversee the lenders. 

After Higher Education Watch a reported that, in 2003, Fontana sold stock in Education Lending Group Inc., the owner of Student Loan Xpress, the USDE moved the next day to take action.  

The USDE also asked for the resignation of Lawrence Burt from the Advisory Committee on Student Financial Assistance. In a written statement, USDE spokeswoman Katherine McLane said, “Mr. Burt, associate vice president for student affairs at the University of Texas at Austin, was one of three student-aid administrators reported by Higher Education Watch to have also held stock in Education Lending Group Inc.” 

USDE asserted that it is taking this case seriously and its general counsel is reviewing the matter and has also referred it to the Office of the Inspector General. Congress is also looking into the issue—Representative George Miller of California made an official request to Secretary Spellings in which he asked for a list of any other relationships between department employees involved in student loan operations and lenders. Congressman Miller’s letter requested copies of all “relevant documents, including all electronic and written correspondence, notes, meeting minutes and departmental guidelines.”  According to Congressman Miller, this case is a series of “disturbing findings of improper relationships.”

—Jamillah Moore, Ed.D.