Nelnet Gets to Keep $278,000,000 in Illicit Student Loan Interest Payments

ED's Inspector General's Office announced back in September that ED had overpaid conservative political bankroller, Nelnet, $278 million in interest for student loans that had been subjected to the sleazy practice of "loan recycling."

Now Maggie Spellings has decided to let them keep their fraudulent gains. Why? Incredibly, the only excuse that the ED lawyers can come up with is that if ED starts going after the $278 million owed them by Nelnet, then they might endanger other ill-gotten gains from other crooked outfits (who have paid, through campaign contributions, for admission into the federal treasury feeding frenzy):

Education Secretary Margaret Spellings rejected the inspector general's recommendation that the department seek to recover past overpayments. The audit estimated that Nelnet already has been improperly paid more than $278 million by the government.

Recovering past payments might require the government to also go after money other lenders have received, including some small nonprofit lenders, according to Department of Education officials who spoke on the condition of anonymity because of the sensitive nature of the settlement. The federal officials said they didn't want to put small lenders out of business.

“This decision was reached in the best interests of taxpayers and students as well as the integrity of the federal student loan programs. The federal student loan programs are an important pillar in this nation's system of financing college opportunity and offer students and families the ability to afford higher education,” Under Secretary Sara Martinez Tucker, who oversees higher education issues, said in a statement.

The audit by the inspector general's office report found that Nelnet has improperly sought and received an artificially high rate of return on many of its loans.

Right on cue, Kennedy and Miller are out front to let the world know how disgusted they are about the decision:

“The administration should have settled for nothing less than the full recovery of Nelnet’s ill-gotten proceeds from these loans,” said Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate Health, Education, Labor and Pensions Committee. “The Department of Education’s settlement is a loss for students and taxpayers, who are the victims of Nelnet’s greed.”

Representative George Miller, Democrat of California and chairman of the House Committee on Education and Labor, said his panel would investigate the accord. “We will ensure that taxpayer dollars are used properly,” Mr. Miller said in a statement.

The question is: what will Miller and Kennedy do to oversee and investigate this thievery? And what about the Reading First corruption uncovered by another OIG Report last fall? Will Kennedy and Miller stand by and let Spellings deliver more imperial decrees on that matter as well?