The Education Department’s (ED) Inspector General (IG) released a report on Monday claiming that Nellie Mae, a subsidiary of loan giant Sallie Mae, improperly received $22.3 million in taxpayer subsidies from ED between 2003 and 2006. The report is the latest episode in what has come to be known as the “9.5% scandal,” in which student loan companies continually refinanced certain loans which were eligible for additional federal subsidies.

The IG recommended, among other things, that ED force SLM to pay back the ill-gotten subsidies. So far, only NelNet has been forced to return these kinds of improper payments, and even this company was allowed to keep nearly three hundred million dollars in improper payments.

I hope that Obama’s ED does not follow in the foot steps of the Department under President Bush. They should make sure that no one can raid the American treasury and keep the booty.

Unfortunately, Sallie Mae and other student loan companies are also getting rich from wasteful—but totally legal—government subsidies. Luckily there is now a plan in Congress, originally proposed by President Obama, to eliminate all wasteful subsidies to student loan companies and use the $87 billion in savings to make college more affordable and accessible. The loan companies have already spent millions lobbying against it, so it is really important that Congress hears from you.

* Cross-posted at Students over Banks