National Student Loan Data System Set to Reopen

Several weeks ago the U.S. Department of Education temporarily suspended access by private lenders to the National Student Loan Data System (NSLDS) in the wake of reported abuses of the system. However, according to a May 1, 2007 article written by Paul Basken, titled “Education Department Plans to Reopen Student-Loan Database to Lenders, With New Safeguards” that appeared in The Chronicle of Higher Education, “The department, in a notice posted on its Web site, said it was introducing new rules, effective on Monday, that require all NSLDS users to provide the borrower's date of birth and first name, in addition to the previous requirement for the borrower's Social Security number”

Basken reported that additional changes require “the user to complete a box matching a pattern of random letters and numbers - a technique designed to prevent automatic data retrieval by outside computers”

Reinstatement of the Database to Be Phased In

By installing safeguards into the ability to access NSLDS, the Education Department hopes to reach a happy medium between those who are citing problems with the system and those who need to use the system to help process loans. The department plans to reinstate access to the database in phases.

Basken reported that the decision to allow private lenders to once again access the database, follows a letter sent last week to Education Secretary Margaret Spellings by Henry B. Howard, chairman and chief executive officer of U.S. Education Finance Group, a Florida-based lender, complaining that the shutdown was unfairly penalizing student-loan companies that had no involvement in the alleged database abuses.

“Your decision last week seems largely based on a recent article in The Washington Post and a request for immediate action by Senator Edward Kennedy,' Mr. Howard wrote to Ms. Spellings. 'Unfortunately, this article had several major facts that were just wrong and contained other errors as well”

Erroneous Reporting by The Washington Post

So what did The Washington Post get wrong? Basken reported, “The errors include the fact that The Post reported the database contains each borrower's telephone number and e-mail address. Neither of those are in the database, according to the Education Department. Mr. Howard also contended that The Post erroneously suggested that a memo by the department's assistant inspector general had expressed concern that outside users of the database were using it to market student loans and other products. The memo insteadidentifies flaws in how the department manages system security for its contractors, Mr. Howard wrote”

It's great that lenders will be able to once again access the National Student Loan Data System. However, when will that access be granted and on what terms. Apparently that has yet to be determined.

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By Student Loan Girl

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