Chairman Miller Statement on Department of Education Decision to Recoup $15 Million in Overpayments from PHEAA

Friday, January 25, 2008

WASHINGTON, DC -- U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, issued the following statement in response to the U.S. Department of Education’s decision to recoup $15 million in federal subsidies improperly paid to the American Education Services (AES)/Pennsylvania Higher Education Assistance Agency (PHEAA). A report released by the Department’s Inspector General in November estimated that PHEAA had over-billed the Department by at least $35 million in payments in recent years.

“I am glad that Secretary Spellings has finally begun to hold lenders accountable for their abuse of the federal student loan programs. For quite some time, Congress has been urging the Bush administration to conduct vigorous oversight of lenders and fully enforce the law. Although today’s action doesn’t erase the administration’s failure last year to recover hundreds of millions of taxpayer dollars misspent by Nelnet, it is a step in the right direction for students and families working hard to pay for college. And while I am disappointed that the Department is not seeking to collect the full amount recommended by the Inspector General, I hope that this decision is a sign that the Department is finally starting to take its role as the steward of our nation’s federal student aid programs seriously.”

BACKGROUND

In January 2006, the Department of Education reached a settlement with Nelnet, Inc., that allowed the lender to keep $278 million in federal subsidies it received under the 9.5 percent loophole in return for Nelnet’s agreement not to seek additional subsidy payments it believed it could be eligible for. The settlement agreement came after the Department’s Inspector General recommended the Department seek full repayment of the $278 million from the company.

###

FOR IMMEDIATE RELEASE
Contact: Tom Kiley / Rachel Racusen
2181 Rayburn House Office Building
Washington, DC 20515
202-226-0853