Monday, August 31, 2009

Virginia loan lawsuit (with link to Best-in-Class debacle)[AND A CORRECTION]

In 2007, the federal government ruled that many student loans were [ineligible] for some valuable subsidies on loans tied to older tax-exempt bonds. Kentucky's Student Loan People saw a major drop in income as a result, and that's one of the reasons they have been unable to forgive Best-in-Class loans to teachers.

The Chronicle is reporting (here) on a lawsuit filed against several loan providers who received the same sort of subsidies:

A former Education Department researcher has filed a lawsuit seeking the return of $1-billion in excess student-loan subsidies to the federal government.

Jon H. Oberg, who retired in 2005, says he warned his superiors in 2003 about a loophole that was allowing some of the nation's largest lenders to reap windfall profits from the federal government, but was brushed off and told to work on other things.

* * *

The lawsuit, which Mr. Oberg filed in the U.S. District Court for the Eastern District of Virginia, takes aim at several student-loan companies, including Nelnet and Sallie Mae.

I can't find any more information tonight on what other companies might be named as defendants. Does anyone have information on whether the Student Loan People are or are not included?

For more on the Best-in-Class debacle, my earlier posts are here, with the specific one on the subsidy income here.

[The word ineligible should have been in the original post, and I've inserted it above.]

1 comment:

  1. Yes, I saw in another online article that KHESLC is one of the defendants.


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