Lenders and guarantors were surprised last evening when they unexpectedly lost access to the National Student Loan Data System (NSLDS). They quickly learned that their access was temporarily suspended by the Secretary of Education. The abrupt shut-off comes only days after a Washington Post article reported that some lenders were misusing NSLDS data to obtain borrower information for marketing purposes and after Senator Kennedy, chairman of the Senate Health, Education, Labor and Pensions Committee, called on Secretary Spellings to suspend lender access and provide him with any documents held by the Department related to NSLDS security breaches.
As lenders attempted to log on Tuesday evening they were met with a notice posted on the NSLDS Web site that read,
Effective immediately, access to information in the National Student Loan Data System (NSLDS) by all participants in the student loan program except students, borrowers and institutions of higher education is temporarily suspended. During this temporary suspension of access, the Department will more fully examine the specific usage of NSLDS by those entities for which access has been suspended to determine if there was unauthorized usage. Upon completion of this examination we will consider options for providing NSLDS access to these entities.
Secretary Spellings sent a letter to Senator Kennedy yesterday, "setting the record straight" regarding NSLDS and other, related matters recently reported in the media. The Secretary defended the diligence with which the Department has safeguarded the privacy of borrowers, pointing to the $650,000 investment in NSLDS security and monitoring tools since 2003 as proof. According to the Secretary’s letter, more than 52,000 NSLDS user IDs have been revoked since those security measures were taken. While the majority of those user IDs were revoked due to inactivity, the Secretary noted that 261 user IDs have been revoked due to suspicious activity, and of those user IDs, 246 belonged to lenders, loan holders, guaranty agencies, and servicers.
Secretary Spellings went on to state that the Department has observed "a significant increase in [NSLDS] usage by lenders, loan holders, servicers, and guaranty agencies." According to the letter, this was disconcerting to the Department and after considering several alternatives, they decided to suspend, effective yesterday, access to NSLDS by lenders, loan holders, servicers, and guaranty agencies. Schools, students, and borrowers have retained access rights to NSLDS data.
"Access to NSLDS is granted solely for the purpose of helping to determine the eligibility of an applicant for federal student aid and the collection of federal student loans and grant overpayments," wrote Secretary Spellings. "This information may not be used for any other purpose, including the marketing of student loans or other products," she added.
The Secretary also assured Senator Kennedy that borrower contact information is safe since "contrary to what has been reported, NSLDS does not provide access to email addresses, phone numbers or any other addresses of borrowers."
The Spellings letter went on to list specifically how the Department has gone about ensuring proper user compliance with NSLDS, including working with and implementing recommendations from the Office of Inspector General, noting that "as a result, the student financial assistance programs were removed, after 15 years, from the Government Accountability Office High-Risk list in January 2005."
Kennedy issued a response to Secretary Spellings saying, "I appreciate the Secretary's willingness to take action to protect personal student information. I look forward to working with her to ensure that students receive their loans without sacrificing their privacy. We must also ensure that students' interests are put first with respect to all aspects of the student loan programs."
While the suspension of access is being called temporary, the Secretary gave no indication of when access would be returned to lenders and guarantors who regularly use NSLDS to confirm aggregated loan amounts, student enrollment data for deferments and forbearance purposes, and act as NSLDS data providers. "[T]he Department, in consultation with the OIG, will conduct a review of the specific uses of NSLDS by these entities to determine if there has been unauthorized usage," wrote the Secretary. "The Department will also review all guidance to determine whether updates are needed."
NASFAA will be closely monitoring this situation and more information will be forthcoming as the implications of these recent events are examined by staff.
Additional Media Coverage
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 04/18/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
