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ERIC Number: EJ769744
Record Type: Journal
Publication Date: 2007-May-18
Pages: 1
Abstractor: ERIC
ISSN: ISSN-0009-5982
Suspended Education Department Official Had Approved Waiver for Former Employer
Basken, Paul
Chronicle of Higher Education, v53 n37 pA18 May 2007
Matteo Fontana, the student-aid official in the U.S. Department of Education who was suspended last month in an ethics case, issued a controversial high-stakes legal ruling in 2004 that benefited his former employer, Sallie Mae, on the day before the nation's top student lender completed its transition from a government-founded lender into a for-profit corporation. Mr. Fontana's ruling stemmed from the 2002 audit by the Education Department's inspector general, which concluded that Sallie Mae's relationship with USA Funds amounted to a violation of the law because the Sallie Mae subsidiary that provided workers to USA Funds was a wholly owned unit of Sallie Mae. In his ruling, Mr. Fontana declared that Sallie Mae could legally perform debt-collection services for a partner company, USA Funds, even though federal conflict-of-interest regulations prohibit such work by the same "entity" that holds the loan. In his December 2004 ruling, Mr. Fontana said the conflict of interest cited by the department's inspector general did not exist because the Sallie Mae subsidiaries that staffed USA Funds had different tax-identification numbers from the subsidiaries that did not. That logic is disputed by experts both inside and outside the Education Department, but both Sallie Mae and USA Funds contend that Mr. Fontana's ruling was proper.
Chronicle of Higher Education. 1255 23rd Street NW Suite 700, Washington, DC 20037. Tel: 800-728-2803; e-mail:; Web site:
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A