Education–No Lender (or brother) Left Behind

This is, if nothing else, a pro-business administration.
The No Child Left Behind program promise to the education of our kids is rife with special interests, feeding at the educational trough. From (now) fired commentator Armstrong Williams, who helped himself to  $240,000 from the Department of Education for promoting No Child Left Behind, to school districts using federal funds to buy Ignite’s portable learning centers at $3,800 apiece.
Ignite is a company owned by the president’s brother, Neil Bush. According to an October, 2006 article in the Los Angeles Times by Walter Roche,

“In Houston, where Neil Bush and his parents live, the district has used various funding sources to acquire $400,000 in Ignite products. An additional $240,000 in purchases has been authorized in the last six months.”

Now, however, government largesse has spilled over to lending agencies.
The Student Loan Program, just this past month, allowed a student loan company to keep $278 million in improper subsidies. There are also accusations that loan companies provided universities questionable perks to direct students their way. Wouldn’t any such steering be questionable?

“But hey guys, don’t sweat paying the money back,” like Donald Rumsfeld says, “stuff happens.”

That particularly good stuff happens to Republican-connected people and businesses, is par for the course in Washington these days. But the Democrats are in charge of the appropriations process now, so abuses will be a bit less flagrant for a while, because it historically takes Democrats longer to get organized.

But organized they will get and abusive they will become.
Further, it’s the nature of Democrats to go to jail for smaller crimes. Compare Dan Rostenkowski (a Democratic powerhouse) going to the pokey for abusing his franking (mailing stamp) privileges and Randy (minor Republican) Cunningham’s flagrant Rolls Royce and ‘borrowed’ yacht. Dems have a harder time getting their eye on the big picture. But they’ll focus—just give them a few years, they’ve been away from the trough.

That kids trying to get educated should be on the downside of this flim-flam, pays tribute to the numbers. $56 billion in discretionary items for 2008. A discretionary $1,000 for every student. A thousand dollar pea in the educational shell-game. That, of course, is in addition to your local school taxes and the personal costs of college.


Brenda K. Pfeiffer, our hero of the moment and a 41-year-old Minnesota chiropractor, has finally—out of frustration—instituted a class-action suit. Amit Paley writes in the Washington Post,

A computer glitch apparently caused more than 3 million student loan borrowers to be billed hundreds of millions of dollars more than they owed, said lawyers who brought the class-action suit . . .

. . . The suit, filed in U.S. District Court in Washington, says a complex billing problem affected Americans with consolidated loans that totaled more than $72 billion. The suit says the department essentially imposed late fees on borrowers even though their payments were made on time.

A glitch? A glitch is when my word-processor won’t print properly.

Knowingly over-billing three million students isn’t a glitch, it’s a prison-term. Except in Bush-land, where it’s just part of the stuff that continues to happen on an unendingly daily basis. These people are not so much evil as they are incompetent.

Pfeiffer said she notified officials about the overbilling mistake at least 15 times over the phone and in writing. “Most of the time I was told that, yes, we realize that this isn’t right, but that’s the way the system is,” she said.

That’s the way the system is? The system has knowingly and abettingly and illegally siphoned off almost $300 million into private pockets. Some say the number could be four times that.
If California’s three-strike law can send a homeless man off to prison for life for shoplifting, then the entire $64 billion Department of Education ought to be able to get someone indicted and jailed for stealing from college kids—or 41-year-olds paying off their college loans.

Not by the hair of your chinny-chin-chin. According to Jonathan Glater over at the New York Times,

The Bush administration reached an accord with a student loan company that will let it keep $278 million in subsidies that the inspector general of the Education Department found improper, the department said yesterday.

An accord. If that accord was taken out in Honda Accords, it would buy a fleet of approximately 11,500 cars. Stealing a car is a felony offense. This accord was agreed to by Under Secretary of Education Sara Martinez Tucker. She said (according to NYT)

the department had decided not to recover past payments because such a precedent might require it to pursue other loan companies, too, possibly driving smaller ones out of business and reducing borrowing options. “We were trying to make the best decision for the taxpayer and the student.”

So, if I have this straight,

  • requiring crooked lenders to pay back their improper overpayments
  • might mean that other crooked lenders would have to be made to pay as well.
  • If that happened, crooked lenders might get out of the market altogether.
  • And if that happened, there would be no crooked lenders at all for college kids to get money from.

Not only that, but taxpayers would not be able to come up with the
money for crooked lenders to lend
. . . or something . . . it’s a tad murky, you have to
get Sara Martinez Tucker to explain it.

Glater’s article explains,

The audit by the inspector general found that Nelnet had improperly exploited a subsidy program that guaranteed it 9.5 percent interest on loans. The guarantee was established in the 1980s, when interest rates were high, to keep lenders in the college-loan business.

Congress tried to rein in the program in 1993, but the loans ballooned as lenders found ways to increase their portfolios of loans that they said were eligible for the guarantee.

In September, the office of the Education Department inspector general said Nelnet, acting when interest rates were low, enlarged its portfolio of eligible loans to nearly $3.7 billion in June 2004, from $551 million in March 2003. The report found that the increased amount “was ineligible to be billed under the 9.5 percent floor.”

As of Dec. 31, Nelnet said it had $3 billion in loans it considered eligible for the 9.5 percent payments.

Nelnet’s Mike Dunlap ought to be an ideal fit for a U.S. Attorney’s investigation, presuming Alberto Gonzalez has any to spare. What we have here is a failure to communicate.

But last year Nelnet spent $460,000 on lobbying in Washington, so that could conceivably have an impact on the double-talk coming out of Education Secretary Margaret Spellings’ office.
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