Page 29 - FCW, September 15, 2017

Vendors are misusing federal student loan credentials, but the government has been hampered in its efforts to prosecute them
BY ALIYA STERNSTEIN
Federal prosecutors have declined to bring charges in a series of cases involving tampering with federal student loan accounts, including six instances of manipulation by employees at a credit reporting firm.
Workers at that firm, then known as Kroll Fac- tual Data, tampered with several federal student loan accounts to the point where customer service representatives at one loan provider could not trust the data in their computers.
The episode came to light in 2013 after a cus- tomer at federal loan provider Sallie Mae com- plained that the email address on his account had been changed without his permission, according to a heavily redacted report released by the Edu- cation Department’s Office of Inspector General and obtained through a Freedom of Information Act request.
According to the 2015 final report, Sallie Mae told the government that the individual who manipulated the customer’s account “impaired the integrity of the data in Sallie Mae systems,” and “if the email address has been changed without the knowledge of Sallie Mae or the customer, then Sallie Mae can- not trust the data in the system.”
No one was ever prosecuted for a crime in the Kroll Factual Data case, however, or in nearly 20 similar cases at other financial companies recounted in a September 2016 IG audit.
The investigations highlight the challenge of penalizing companies that manipulate sensitive borrower data for commercial or personal gain. The 2016 audit report that exposes credential abuse warns that when outside entities open accounts or change user information, the Education Department and loan servicers might not be able to contact the borrower. Additionally, the report asserts that such activity violates federal user agreements.
Some lawmakers are pressing the Education Department to stop the growing problem by bet- ter securing the National Student Loan Data System, a central government database that underpins all student financial aid accounts.
Online student loan deception was the focus of two House Oversight and Government Reform Committee hearings in May. Rep. Elijah Cummings (D-Md.), the committee’s ranking member and an advocate for student aid reform, said Kroll’s med- dling was similar to other cases the committee has reviewed.
“It is outrageous that these companies could not be prosecuted because of technicalities for con- duct they must have known was wrong,” Cummings wrote in an email message. “We need to prevent loan servicing companies from engaging in these abuses and hold them accountable for protect- ing the students they are supposed to be serving. These are abuses, plain and simple.”
After the customer contacted Sallie Mae about the email address change, in-house investigators checked his PIN account. They determined that he had been locked out of his account, and someone re-enrolled him under a new PIN. All the activity was traced back to an IP address assigned to Kroll, according to the Education IG’s report.
Stymied investigations
Spokeswoman Patricia Christel said Navient, which spun off from Sallie Mae in 2014 and services fed- eral student loans, did not authorize Kroll’s online activities and did not provide Kroll with any cus- tomer information related to federal student loans.
“Our security program worked as designed to detect unauthorized traffic, and we followed estab- lished procedures to notify federal officials and col- laboratively work with law enforcement,” Christel said, adding that Navient follows industry best prac- tices to safeguard customer privacy.
The IG investigation uncovered records show- ing that Kroll employees changed six usernames on Sallie Mae accounts to a fictitious name. The report states that the company said it “counseled” one of the employees, but it is unclear what the admonishment involved.
Catherine Grant, congressional and public affairs liaison at Education’s IG office, said Kroll Factual
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