Student loan corruption began, where else,? PENNSYLVANIA

 “Pennsylvania Higher Education Assistance Agency (PHEAA), which would eventually branch off and create FedLoan.” ... 

(After all, if you’re a servicer on a loan you guarantee, you might as well just let the loan default, and then you get to do the highly lucrative work of collecting it.)  

‘The most important thing to remember’ about the federal student loan program, he said, ‘is borrowers are not the customer. Borrowers are the product.”

“ Even before it created FedLoan, there was plenty of reason to believe that PHEAA’s priorities were askew. In 2007, investigations by news outlets, including the Patriot-News, based near PHEAA’s Harrisburg headquarters, revealed the agency had given out $2.5 million in bonuses to executives that year and had spent almost $1 million between 2000 and 2005 on board retreats that included $150 cigars and falconry lessons. Then-CEO Richard Willey made nearly $500,000 in 2007: His $181,000 bonus that year was more than the governor’s salary. Amid this criticism, Willey resigned.

That same year, PHEAA was sued by Jon Oberg, a former Education Department researcher who accused it and eight other state and nonprofit lenders and guarantee entities of intentionally overcharging the government. In PHEAA’s case, this allegedly amounted to $116.5 million between 2002 and 2006. All the agencies were caught up in the scandal, a former Education Department official who asked not to be named told me, but PHEAA was “particularly bad.” In December 2017, PHEAA was acquitted of defrauding the department; the verdict is on appeal. (The others named in the suit settled or had their cases dismissed.)”

The Incredible, Rage-Inducing Inside Story of America’s Student Debt Machine

Why is the nation’s flagship loan forgiveness program failing the people it’s supposed to help?

By Ryann Liebenthal; Photographs by Zach GrossSeptember/October 2018 Issue