Higher Ed Watch in Philadelphia Inquirer on Taxpayer Rip-Off

All indications are that Pennsylvania's non-profit, student loan agency is one of seven student loan providers that aggressively overbilled the U.S. Treasury hundreds of millions of dollars over the last several years. Pennsylvania's Higher Education Assistance Agency (PHEAA) has shown no remorse. In fact, PHEAA wants to keep the excess money flowing into its coffers for years to come.

Like most bad actors, like most criminals, PHEAA is apt to deny wrongdoing until the authorities, in this case the Secretary of Education, come down with a definitive and final judgment that the company acted illegally. At that point and maybe even a little before, PHEAA will claim that to hold it accountable will hurt the students, the children, it's supposed to serve.

What's the government to do?

First, it's important to keep in mind that PHEAA isn't your run-of-the-mill, small fry, non-profit, do-gooder organization. It's the eighth largest student loan provider in the country, the largest non-profit student loan provider.

Second, know that this past year PHEAA doled out almost $900,000 in executive bonuses to its top seven executives, including CEO Dick Willey -- money that Pennsylvania Governor Ed Rendell rightly said should have gone to students.

Third, neither the Higher Education Act, nor criminal law allows the corporate form to shield a firm from accountability, nor should they.

In today's Philadelphia Inquirer, we make some recommendations as to what to do about PHEAA. Most important is to turn off the spigot for every improper 9.5 percent loan still out there and send the taxpayer savings directly to students in the form of bigger grants or lower loan payments. Based on their executive bonuses, PHEAA can't be trusted to do the job on its own. As for past subsidy payments improperly claimed, PHEAA should give the money back -- making sure that aid to students is held harmless.

No matter what, that executive bonus money should be taken back and some PHEAA executives should lose their jobs as well. PHEAA's bilking of taxpayers can't be tolerated, no matter how many kids they hide behind.

-- For more information on the 9.5 percent student loan scandal, see our blog posts here, here, and here; news coverage here and here; and the event where we unveiled the original whistleblower here.