Sunday, April 15, 2007

Private sector lenders reportedly mining Education Department student loan database

The Washtington Post is reporting that the US Department of Education's national database of student loan recipients is being trolled for illegitimate purposes by authorized users. This has apparently been a problem for over four years.

Lenders Misusing Student Database -

....The database, known as the National Student Loan Data System, was created in 1993 to help determine whether students are eligible for student aid and to assist in collecting loan payments. About 29,000 university financial aid administrators and 7,500 loan company employees have access to it.

In a recent meeting with university financial aid directors, Theresa S. Shaw, chief operating officer of the department's Office of Federal Student Aid, which manages the database, said lenders have been mining it for student data with increasing frequency, according to three participants at the meeting. In the department's hierarchy, Shaw ranks above Fontana.

"She said the data mining had gotten out of control, and they were trying to tone it down," said Eileen K. O'Leary, director of student aid and finance at Stonehill College in Massachusetts, who was at the Feb. 26 session. "They'd seen the mining for a few years, but now they felt it had grown exponentially."

The department first started noticing a problem in mid-2003 when loan consolidation became more popular, according to an agency official who spoke on condition of anonymity because of the sensitivity of the matter. As companies began to aggressively look for low-risk borrowers to target for consolidation plans, they turned to the database for prospective customers, the official said.

The article says thousands of users have had their privileges revoked after security reviews showed abuse.

Assuming that it really is necessary to allow private sector players to have access to this database in the first place, perhaps prosections under the Computer Fraud and Abuse Act would get users' attention.

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