Durbin Presses Student Loan Companies for Answers on Improper Use of Student Data
DURBIN PRESSES STUDENT LOAN COMPANIES FOR ANSWERS ON IMPROPER USE OF STUDENT DATA
U.S. Senator Dick Durbin (D-IL), Chairman of the Appropriations Subcommittee on Financial Services and General Government, today sent a letter to 18 of the largest student loan companies asking for details regarding their use of the National Student Loan Data System. A recent article in the Washington Post reported that some lending companies have violated federals rules against using data-mining techniques to identify students for marketing purposes.
"We now know that today's students are not only dealing with increasingly higher interest rates, they are playing a rigged game where lending companies can see all the cards," said Durbin. "There are currently 60 million people whose confidential information could have been illegally accessed by student loan companies. These students and their families need to know who has had access to their information and for what purpose."
The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student aid. The NSLDS receives data from schools, guaranty agencies, the Direct Loan program, the Pell Grant program, and other Department of Education programs. The database includes highly sensitive information including social security numbers, e-mail addresses, phone numbers, birth dates and financial information such as loan balances. According to federal rules, lenders are only allowed to access information in the database if they have the permission of the student or have a financial relationship with the student.
The Washington Post article also reported that the Department of Education began noticing that lenders had been mining the database with increasing frequency in 2003. In 2005, the Department of Education became so concerned with the level of data mining that a letter was sent to database users warning against improper use of the system. Some fear that lenders were not only violating these laws but were also giving unauthorized access to marketing firms, collection agencies and loan brokerage firms.
Text of letter below:
April 17, 2007
Dear _____:
The Washington Post recently reported that some lending companies with access to the National Student Loan Data System, which includes confidential information on 60 million student borrowers, have repeatedly searched the database in ways that violate federal rules. Lenders were also giving unauthorized users such as marketing firms, collection agencies, and loan brokerage firms access to the database.
The database includes highly sensitive information including, social security numbers, e-mail addresses, phone numbers, birth dates and sensitive financial information such as loan balances. Lenders are allowed to access information contained in the database only if they have the permission of the student or have a financial relationship with the student.
According to the article, the Department of Education (DoEd) began noticing that lenders had been mining the database with increasing frequency in 2003 and was sufficiently concerned with the level the data mining had reached by 2005 that DoEd sent a letter to database users warning against improper use of the system. DoEd officials suspect that lenders were gathering student information to market additional loans or other financial products.
As Chairman of the Financial Services and General Government Appropriations Subcommittee, I am particularly concerned by the possibility of consumer protection violations. In light of these concerns, please provide the following information:
# 1) How many records in the database have you accessed or provided other companies access to in each of the past four calendar years and in the first quarter of 2007?
# 2) With whom have you shared the information accessed from the database?
# 3) What other companies have you authorized to directly access the database?
# 4) Why was the information obtained by you or by any company to which you provided access to the data?
# 5) Describe all the ways in which your company or other companies subsequently used the information from the database including contacting borrowers about their loan(s), marketing other loans or products, and any other contacts based on that data.
I appreciate your prompt response to these questions.
Sincerely,
Richard J. Durbin
Chairman
Subcommittee on Financial Services and General Government
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