Rep. Tom Petri (R-WI) is raising questions about what he calls a "troubling relationship" between Sallie Mae and USA Funds. In a letter to House education committee leaders Petri pointed to a 51-page contract between the two entities as proof that their relationship is "highly questionable."

Petri cited a recent article in the The Chronicle of Higher Education that called into question the contractual arrangement "that gives the lender extensive financial and operational control over the guarantor that oversees its work."

Petri believes that the Department has been too lax in its oversight responsibilities.

"Even more disturbing is the fact that in 2004 the Department of Education ignored its own Inspector General's recommendation that a conflict of interest needed 'to be cured' between the two entities," Petri wrote. "Instead, the Department ruled that the relationship raised no such concerns."

Petri asked the education committee leaders to look into the Sallie Mae/USA Funds contract, along with other similar contracts, to help clean up "the waste, fraud, and abuse that has plagued the FFEL program."

By Justin Draeger
NASFAA Associate Director for Communications

Posted 07/01/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.