By Amit R. Paley
Washington Post Staff Writer
Thursday, May 3, 2007
The U.S. Department of Education moved yesterday to restore loan industry access to a national database with confidential information on millions of students, two weeks after it was shut down amid allegations of data mining and privacy violations.
The agency also tightened security in an effort to prevent computer systems from mining the 60 million student records in the database. All users will now be shown a screen of random numbers and letters and asked to type them before logging in.
Alarm about the database's security is part of a growing controversy about questionable business practices in the $85 billion-a-year student loan industry. The department shut down lender access to the database after The Washington Post reported on improper searches of the system that raised concerns from congressional Democrats.
"We have instituted a 'no tolerance' policy with regard to individuals who do not comply with NSLDS access and use requirements," wrote Pam Eliadis, who oversees the National Student Loan Data System, in a letter sent yesterday to 35 loan guarantee agencies.
The resumption of access will extend at first to guarantee agencies, then to lenders and other companies in the student loan business, agency officials said. But lenders, who use the database to verify student loan information, complained that the shutdown is preventing them from helping customers trying to consolidate their loans.
"The department's action is having consequences that far outweigh any potential abuse the department was trying to avoid," Henry B. Howard, president of U.S. Education Finance Group, wrote last week.
Sen. Edward M. Kennedy (D-Mass.), chairman of the Senate education committee, said he was pleased with the database security review. But, he said, "students and families deserve a more detailed explanation from the Department of Education about why this problem persisted for so long."
Also yesterday, Rep. George Miller (D-Calif.), chairman of the House education committee, asked the Federal Trade Commission to investigate allegations of deceptive marketing practices in the loan industry.