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Student loan companies illegally use US database

Education department shuts down access

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The US government has temporarily barred college loan firms accessing a database containing personal and financial details of nearly 60 million people after a Washington Post article reported it was being used illegally.

The paper revealed that some lending companies with access to the National Student Loan Data System repeatedly searched it in ways that violate federal privacy laws.

Students' Social Security numbers, birth dates, phone numbers, email and financial records were contained within the database records.

the Department of Education allows lenders to search the database only if they have a student's permission or a financial relationship with the student, the Washington Post reports.

Access was meant to be restricted to determining if a student is financially eligible for financial aid. Some lending companies were allegedly allowing marketing firms and collection agencies to use the database as well.

The department has voiced concerns about the database's security since 2003, and has spent $650,000 and blocked 246 users to safeguard the data.

But the $85bn student loan business isn't short on resources for such shenanigans. According to the New York Times the industry has recently become cosy with the educational system to get its foot in the door.

Several state attorneys generals and two committees of Congress are currently investigating financial relationships between university officials and student lenders.

The Department of Education also suspended Matteo Fontana, an official that helped oversee the loan database after it was revealed he owned more than $100,000 in Student Loan Xpress stock. Fontana, who had disclosed his shareholdings, was put on paid leave while the department determines if it is a violation of interest. ®

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