September 7, 2007

Lenders Pulled $3.5-Billion Through a Loophole

By PAUL BASKEN

Nonprofits led the way as student-loan companies collected vast federal subsidies

Last September an Education Department audit found that the for-profit lender Nelnet improperly kept some $300-million in government student-loan subsidies through a loophole in federal law. Nearly a year later, the department has found that its 9.5-percent loan program cost more than 10 times that much, including more than $560-million paid to Nelnet alone.

The data, supplied to Congress during

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