Education Policy Program Directory Michael Dannenberg was the featured guest for CNBC's recent report on the student loan scandals, which aired as part of "The Wall Street Journal Report with Maria Bartiromo." A partial transcript and video clip are available here; for the complete piece, please visit the CNBC website.

Mr. ANDREW CUOMO (New York Attorney General: (Wednesday) Our position is very simple. Loan decisions should be made in the best interest of the students and not the best interest of the school.

MARIA BARTIROMO, host: That was New York Attorney General Andrew Cuomo announcing a $2 million fine against Sallie Mae. That punishment the result of a nationwide investigation into colleges and lenders who allegedly work together to steer students toward higher cost loans. Joining me now with more is Michael Dannenberg. He's the director of the New America Foundation, a nonprofit and nonpartisan education policy think thank, which ran its own investigation into these sweetheart deals.

Michael, nice to have you with us. Thanks for joining us.

Mr. MICHAEL DANNENBERG (New America Foundation): Thank you.

BARTIROMO: Now, you actually uncovered one official at the US Department of Education who owned $100,000 worth of stock in a lending company he was supposed to oversee. What is going on here?

Mr. DANNENBERG: I'm afraid that's correct. A senior fellow who works at the New America Foundation, Stephen Burd, found an SEC document that indicated that a Department of Education official had over $100,000 in student loan company stock. I think what it indicates is that the Department of Education has not been keeping a careful watch when it comes to conflicts of interest in the student loan industry, vis-a-vis its own employees or vis-a-vis colleges and student loan banks. Either way, students have not been getting as good a deal as they should be on student loans...

BARTIROMO: Let me ask you about these arrangements. Were any of the arrangements between loan officers, schools and lenders even illegal?

Mr. DANNENBERG: Well, it's certainly questionable whether or not the arrangements between lenders and individual financial aid officers, where the individual financial aid officers were receiving cash payments or stock options, whether that was legal. And that's going to be for law enforcement to determine, and possible the courts. Most of the kickbacks and gifts and in-kind services that have been given to colleges by lenders, presumably are legal and do appear to be legal.

BARTIROMO: Mm-hmm.

Mr. DANNENBERG: So there is an underlying systemic problem with the student loan system. You know, frankly, we need to take the colleges out of this middleman role and have lenders compete for students directly. If we can have a lendingtree.com for home mortgages, we can have one for student loans, as well...