Whistelblower: department largely shut off the subsidies by sending a simple letter to lenders — the very measure Mr. Oberg had urged in 2003

Whistle-Blower on Student Aid Is Vindicated | By SAM DILLON | Published: May 7, 2007

WASHINGTON — When Jon Oberg, a Department of Education researcher, warned in 2003 that student lending companies were improperly collecting hundreds of millions in federal subsidies and suggested how to correct the problem, his supervisor told him to work on something else.

Jon Oberg, a former Department of Education researcher, warned that student loan companies were abusing a subsidy program and collecting millions in federal payments to which they were not entitled.

The department “does not have an intramural program of research on postsecondary education finance,” the supervisor, Grover Whitehurst, a political appointee, wrote in a November 2003 e-mail message to Mr. Oberg, a civil servant who was soon to retire. “In the 18 months you have remaining, I will expect your time and talents to be directed primarily to our business of conceptualizing, competing and monitoring research grants.”

For three more years, the vast overpayments continued. Education Secretary Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act. Then this past January, the department largely shut off the subsidies by sending a simple letter to lenders — the very measure Mr. Oberg had urged in 2003. ...