Federal Student Loan Chief Will Step Down
Wednesday, May 9, 2007
The head of the U.S. Education Department's student loan office announced her resignation yesterday amid mounting criticism of the agency's oversight of the loan industry.
Theresa S. Shaw's exit as chief operating officer of the Office of Federal Student Aid comes as the New York state attorney general, congressional Democrats and the department's inspector general are investigating the loan industry and the web of personal and financial ties linking some key players in lending companies, universities and the government.
Shaw, a former executive at loan industry leader Sallie Mae, has held her department post for five years. Her resignation is effective June 1. Some student-loan consumer advocates gave her a harsh appraisal.
"Her tenure has been characterized by lack of oversight and negligent administration of the student loan program," said Michael Dannenberg, education policy director at the New America Foundation and a former Democratic aide on Capitol Hill.
But Education Secretary Margaret Spellings, who is scheduled to testify tomorrow before a congressional committee that is probing the $85 billion-a-year student loan industry, praised Shaw's performance.
In a statement, the department noted a 2005 decision by the Government Accountability Office that removed federal student financial aid from a list of "high-risk" programs. It also said that under Shaw's leadership, student loan defaults were sharply reduced even as the overall amount of money being lent was on the rise.
"Terri has been a tireless advocate for students and families," Spellings said in the statement. "Her leadership and depth of experience will be sorely missed."
Shaw told Spellings in late February that she wished to leave, the department said. In another statement released late last night, Shaw said, "I had accomplished all that had been asked of me including . . . ensuring that proper financial management and internal controls were in place."
In an earlier e-mail to the student loan office obtained by The Washington Post, Shaw had said she was leaving "to pursue other career opportunities."
"The recent attention on our programs and our work only confirms how very important our programs are to the students and families we serve," she wrote in the e-mail. "I am confident that together we established a solid foundation for Federal Student Aid's continued success."