Loan firms barred from student data

Following reports of abuse, the U.S. government temporarily barred college loan firms from accessing a database containing confidential personal information on millions of student borrowers.

The Department of Education said late Tuesday that the suspension of access was effective immediately and applied to “lenders, loan holders, servicers and guaranty agencies.”

During the suspension, the department “will conduct a review of the specific uses of [the database] by these entities to determine if there has been unauthorized usage,” said Secretary of Education Margaret Spellings in a letter to Sen. Edward M. Kennedy (D-Mass.), who requested the suspension.

The Washington Post reported Sunday that some college loan companies with access to the government-run database had used it in violation of federal rules, raising concerns about data mining and invasion of privacy.

Spellings said that the National Student Loan Data System contained borrower information such as names and birth dates. The Post reported that the database held sensitive financial records such as loan balances.

Spellings said in her letter that the database was meant to be used to determine students’ eligibility for college financial aid, loan collection and grant overpayments, not for the marketing of loans or other products.