Department of Education Official Placed on Leave After Disclosure of Stock in Student Loan Company

A Department of Education official who owned about $100,000 worth of stock in a student loan company while overseeing lenders has been placed on leave, a spokeswoman for the department said Friday.

Matteo Fontana, who oversees lenders and guarantee agencies that participate in the Federal Family Education Loan Program, was placed on leave with pay a day after his ownership of the stock in Education Lending Group Inc. was disclosed.

The case has been referred to the inspector general, said department spokeswoman Katherine McLane.

McLane also said Education Secretary Margaret Spellings has asked for the resignation of Lawrence Burt from the department's Advisory Committee on Student Financial Assistance.

Burt, associate vice president and director of student financial aid at the University of Texas at Austin, is under investigation by the UT System Office of General Counsel regarding allegations of impropriety.

Securities and Exchange Commission records showed Burt also owned 1,500 shares in Education Lending Group Inc., the former parent company of Student Loan Xpress.

The Education Department's actions come as New York Attorney General Andrew Cuomo is investigating allegations of possible kickbacks to school officials for steering students to certain lenders.

Cuomo's investigators say they have found numerous arrangements that benefited schools and lenders at the expense of students.

Fontana did not respond to messages, and the Education Department's press office declined to make him available for comment.

Burt denied that his previous ownership of the shares had any connection to Student Loan Xpress' position on UT's preferred lender list. Burt sold the stock in 2003, he said. Based on the stock's price of $9.50 per share at the time of the sale, Burt made a little more than $14,000.