NEW YORK (Reuters) - The widening U.S. student lender scandal is putting new scrutiny on the ties between private loan companies like Sallie Mae and the government agencies that oversee federal loan programs.

A number of top U.S. Department of Education officials in President George W. Bush's administration previously had worked for student lenders or related groups. Critics say these links have led to weak monitoring of federal loan programs and contributed to the turmoil surrounding the $85 billion student loan business.

On Wednesday, the Democratic chairman of the U.S. House of Representatives' Education Committee called for an investigation of all top employees at the Education Department involved in higher education issues to examine potential conflicts of interests...

Several state attorneys general and two Congressional committees are examining links between university officials and lenders that critics say pose conflicts of interest. Critics of the Education Department's handling of loan programs say the movement of many former private industry people into the department is part of the problem.

"I would definitely say there has been a revolving door," said Stephen Burd, a senior research fellow who studies education matters at the nonprofit New America Foundation. "The Bush administration rewarded lenders with prominent positions throughout the department."

Burd, whose group has criticized universities' ties to private lenders that are recommended to students, said the Education Department had been warned repeatedly of lax oversight of loan programs, including in a September 2006 report by its own inspector general.

But, Burd said, the agency didn't take action.

"I think that's what happens when you rely on industry people to police their own industry," he said...

For the complete article, please visit the Reuters website.