Here's how to fix NSLDS

NSLDS is a credit bureau. The Department of Education may have another view, but in terms of it's function and structure, that's exactly what it is. So let's take the credit bureau model and port it over to NSLDS. It will solve a tremendous amount of problems. Credit bureaus are regulated by the FTC, FCRA, FDCA, and whole host of other acronyms.

Let's start with how access IDs are handled for lenders/servicers/guarantors/etc. Right now each entity has a site administrator. They submit a form to request an individual employee's ID/password. that ID/password is associated with the site making the request. Then when that ID/password makes an inquiry, the inquiry is posted to the borrowers NSLDS record. In otherwords, there is a record of who made an inquiry, when then inquiry was made, and where the inquiry was made from. Furthermore, restrict access from the work site. Right now employees can use their ID/password off work premises to look up any individual.

Now, let's upgrade the web-only interface. Business's in the business of facilitating student loans want the loan data, not a graphical rendering of the data that must be manually reviewed. This will reduce costs for all involved (i.e. lower costs for borrowers as a result of a more efficient workflow).

Costs? Start requiring users to pay for access. That's how credit bureaus make money. Why can't the Dept of Education charge for access? This event alone will put a stop to any (if it exists) prospecting in NSLDS.

Dept of Education? Well, their mission is to see to it that the citizenery is educated. Why are they running a credit bureau? They shouldn't be. Turn this thing over to the experts: the bank regulators, the FTC, and let it be regulated by the Fair Credit Reporting Act, the Fair Debt Collections Act, and all the others. Sure it's a specialized beast dealing with student loan debt, and there's probably some involvement for the Department of Education, but they certainly shouldn't be running the NSLDS operation, regulating the NSLDS operation, or policing the NSLDS operation.

Tomorrow, we'll rant about a much bigger issue: The fact that the Department of Education is regulating a financial intermediary process. We've ranted about this before, but this time instead of just complaining, we'll provide some soluations as well.