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The Education department must explain why it let a student loan company that an audit had found improper millions of dollars. The loan company received the payments through a subsidy program that guaranteed a 9.5 percent interest rate on student loans. In an accord reached in January, the department allowed it to keep the $278 million it had received but suspended future payments of more than $800 million until a future audit could determine whether the company was eligible for the money.

According to Stossel there is a financial corruption going on in American schools. He claims that there is a myth that the education system needs more money. US spend more on schooling than the vast majority of countries that obtain better results in the international tests. But the bureaucrats still blame school failure on lack of funds, and demand more money.

An auditor has been charged for having changed business records in an effort to help conceal the theft of more than $11 million. The district superintendent is accused of stealing more than $2 million; the assistant superintendent for $4 million and a former school accounting clerk for $780,000. Money shall have been used on artwork, jewellery, foreign trips and home mortgages. The scandal that has resulted in a state-wide changes in the way school finances are audited.

A federal grand jury in Kansas indicted a former college-basketball coach last month on charges that he arranged for his players to receive phony academic credit and stole $120,000 in Pell Grants. The former coach faces a total of 51 years in prison and over $1.5-million in fines if found guilty of all counts.

A former Texas Tech University researcher, who was convicted of mishandling harassment complaints and cheating the university out of its share of clinical-research money, was sentenced last week to two years in prison and a $15,000 fine.

A report released by the department says a project called the Distance Education Demonstration Program has shown that waiving financial-aid restrictions on distance-education providers did not lead to any problems. The rules were designed to prevent fraudulent correspondence programs from gaining access to federal student-aid money. But the report leaves out details about one instance in which an institution closed down after it took advantage of a rule waiver and was then found to be riddled with fraud.