OIG Investigates Lender Inducements

The Office of the Inspector General (OIG) at the Department of Education recently sent a memo to Sally Stroup, Assistant Secretary of the Office of Postsecondary Education (OPE), regarding a review it conducted of lender inducements in the Federal Family Education Loan Program (FFELP). Specifically, acting on an anonymous tip, the OIG reviewed two institutions with a notable increase in loan volume through Sallie Mae. In one instance, there was evidence that the institution negotiated a preferred lender deal with Sallie Mae in exchange for a specified dollar amount of private loans.

OIG has recommended that OPE provide guidance to institutions on the anti-inducement provision to these private loans. Additionally, it has recommended that OPE examines the section of the Higher Education Act (HEA) applying to anti-inducement provisions to determine if any change should be made in the upcoming reauthorization of the HEA.

The most recent guidance issued by the Department on lender inducements was issued in 1995. You can access this Dear Colleague letter (DCL 95-l-178) in the Archived section of Dear Colleague letters on the IFAP web site at http://ifap.ed.gov/IFAPWebApp/index.jsp

As soon as updated guidance is issued, we will post that information on the CCA web site.

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