Students’ data an open book to lenders

Some lending companies with access to a national database that contains confidential information on 60 million student borrowers have repeatedly searched it in ways that violate federal rules, raising alarms about data mining and abuse of privacy, government and university officials said.

The improper searching has grown so pervasive that officials said the Education Department was considering a temporary shutdown of the government-run database to review access policies and tighten security. Some worry that businesses are trolling for marketing data they can use to bombard students with mass mailings or other solicitations.

Students’ Social Security numbers, e-mail addresses, phone numbers, birth dates and sensitive financial information such as loan balances are in the database, which is covered by federal privacy laws.

“We are just in shock that student data could be compromised like this,” said Nancy Hoover, director of financial aid at Denison University in Ohio.

Education Department spokeswoman Katherine McLane said the agency had spent more than $650,000 since 2003 to safeguard the database. The department has blocked thousands of users that it deemed unqualified for access after security reviews, McLane said, and it has blocked 246 users from the student loan industry for inappropriately accessing the data.

In general, the department allows lenders to search records in the database only if they have a student’s permission or a financial relationship with the student.

The department has been “vigilant in its monitoring for unauthorized uses” of the database, McLane said.

Concerns about possible abuses are emerging as the student loan industry is under investigation by congressional Democrats and the New York attorney general. Critics say the $85-billion-a-year industry has cozied up to government and university officials who are in a position to help lenders.

The database, known as the National Student Loan Data System, was created in 1993 to help determine whether students are eligible for student aid and assist in collecting loan payments. About 29,000 university financial aid administrators and 7,500 loan company employees have access to it.

In a recent meeting with university financial aid directors, Theresa Shaw, chief operating officer of the department’s Office of Federal Student Aid, which manages the database, said lenders had been mining it for student data with increasing frequency, according to three participants at the meeting.