Government Losses Through Student Lenders' Loophole May Exceed $1-Billion

By PAUL BASKEN

A group of 14 student-loan companies that benefited from a loophole in their federal subsidy collected nearly three times as much as they may have been entitled to otherwise, according to independent audits.

If those findings are representative of all loan companies that received subsidies under a program that guaranteed some lenders a 9.5-percent return on their loans, it would mean that the government had lost nearly $1.2-billion in improper payments over a six-year