The student loan corporation in Pennsylvania improperly exploited a subsidy program to collect $34 million from the government, said a report released yesterday by the inspector general of the federal Education Department.

The audit called on the department to recover the payments to the corporation, the Pennsylvania Higher Education Assistance Agency, a state-owned company that makes and guarantees student loans.

The chief executive of the agency, James Preston, defended its conduct.

In a statement, Mr. Preston said the agency had complied with department regulations and received the payments with the approval of the department. The report, he added, is based on “present-day interpretation of past department regulations,” “and ignores 10 years of our compliance with regulations.”

A spokeswoman for the department, Samara Yudof, said the report was under review.

The subsidy program was enacted in the 1980s, when interest rates were high, as an incentive to continue making the loans. It guaranteed lenders a 9.5 percent rate of return. Congress tried to rein in the program in 1993 as interest rates fell, but the loans ballooned as lenders exploited a loophole to keep receiving the subsidy.