Opinion: Student loan smackdown

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The scandals rocking the student-loan business have Rep. George Miller (D-Martinez), chairman of the House Education and Labor Committee, on the warpath. Today he called on the Education Department to issue emergency regulations to stop lenders from buying goodwill with college and federal financial-aid officials. He also wants the department to halt ‘preferred lender lists,’ which college aid officials provide to students and their parents, ‘until we can ensure that these lists no longer feed corruption and cronyism, which they apparently do now.’

Such criticisms are too broad. Miller admitted that he didn’t know if the problems in financial aid offices were isolated or widespread. Typically, those officials compile preferred lender lists because students and parents don’t have the time or the ability to find the best deals. But the recent scandals certainly have undermined their reputation as honest brokers, and Miller’s push reflects those doubts. The Times’ editorial page has called for a simple, bright-line solution to the problem: a complete ban on financial relationships between colleges and lenders. That would go a long way toward assuring that lenders make it onto preferred lists because they provide better terms and service to students, not to financial-aid offices.