Representative Boehner’s links to student-loan giant could complicate his climb up Capitol Hill
Now that Rep. John A. Boehner has become a leading candidate to be the next majority leader in the U.S. House of Representatives, the Ohio Republican’s ties to Sallie Mae are coming under scrutiny by the news media and some lawmakers.
Sallie Mae, the nation’s largest student-loan provider, has been one of the top contributors to Mr. Boehner’s campaign war chest. As chairman of the House Committee on Education and the Workforce, a post he has held since January 2001, Mr. Boehner has shepherded through Congress student-loan legislation that will affect Sallie Mae’s bottom line and offered assurances that he will protect such lenders’ interests.
According to Federal Election Commission records, Sallie Mae officials contributed more than $100,000, both individually and through political-action committees, to Mr. Boehner during the 2003-4 election cycle — a time when he was drafting legislation to reauthorize the Higher Education Act, the law that governs most federal student-aid programs. That total is equal to about 40 percent of the $259,000 that the student-loan industry as a whole donated to the congressman during that period.
On several occasions, Mr. Boehner was a guest of Albert L. Lord, who was Sallie Mae’s chief executive officer from 1997 to 2005 and is now chairman of its board, on the company’s corporate jet, primarily for golf outings in Florida. The company also helped sponsor a party that Mr. Boehner threw in New York at the 2004 Republican National Convention.
In addition, Mr. Boehner’s daughter, Tricia, works for the General Revenue Corporation, a loan-collection company owned by Sallie Mae.
Sallie Mae officials say they have done nothing improper. They say they have complied with federal campaign-finance and lobbying laws, having, for example, received reimbursement from the congressman for the flights on the company jet. They note that Tricia Boehner was already working for the loan-collection company before Sallie Mae purchased it in 2002, and that she is not involved in the company’s lobbying efforts.
‘Trusted Hands’
Mr. Boehner’s ties to Sallie Mae may not be that unusual on Capitol Hill and, in fact, attracted little notice from his colleagues until he entered the leadership race.
However, in the wake of the indictment of the former House majority leader, Tom DeLay, and a wave of lobbying scandals that has hit Congress hard, the relationship between Mr. Boehner and Sallie Mae is raising red flags among some Republican lawmakers who are trying to repair the party’s image.
“The problem John faces is that he’s so close to K Street,” Rep. Christopher Shays, a Connecticut Republican, recently told Bloomberg.com, referring to a thoroughfare here that is home to many of the country’s top lobbying firms. “That’s the challenge he’s got.”
Aides to Mr. Boehner chafe at suggestions that they are acting at the behest of Sallie Mae or any other student-loan provider. They point out that he pushed a bill through Congress last month that would cut lender subsidies as part of a larger measure that aims to reduce the federal budget deficit.
“The student-loan legislation that passed through our committee in the House did not include changes lobbied for by Sallie Mae,” said Don Seymour, a spokesman for Mr. Boehner. “So any attempt to correlate political contributions to policy is patently false.”
But the bill (S 1932) was not as tough as an earlier version that had narrowly passed the House in November. For example, the earlier measure would have doubled the fee that private lenders must pay to the government to originate a loan, to 1 percent of the amount lent.
Loan-industry officials were in an uproar over that bill. But in a speech he delivered in December at the annual meeting of the Consumer Bankers Association, Mr. Boehner sought to reassure the lenders that they would not be unhappy with the final measure. “Know that I have all of you in my two trusted hands,” he said, adding later, “I’ve got enough rabbits up my sleeve to be able to get where we need to” (The Chronicle, December 16).
The final bill, which must go back to the House for a second vote before it can be completed, not only would soften the cuts for lenders but also, to the delight of the loan industry, could deal a serious blow to the competing direct-loan program.
Direct lending, which was created by Congress in 1993 and championed by the Clinton administration, provides loans directly to students through their colleges, bypassing the banks and student-loan-guarantee agencies that make up the rival guaranteed-loan program.
Competition Assured
Mr. Boehner succeeded in getting a provision into the bill that would allow lawmakers to determine how much the Education Department could spend each year to administer its student-aid programs. Department officials now set a budget each year based on projected mandatory costs.
By putting the budget under the control of Congressional appropriators, lawmakers would ensure that direct lending would have to compete each year with other legislative priorities for spending increases — a move that the program’s supporters and other student-aid experts believe is designed to kill it.
Also at Mr. Boehner’s urging, the legislation would prevent students from consolidating their direct loans while they are still in college, as they can now. It would also make it more difficult than it is now for direct-loan borrowers to extend the time they have to make their payments without refinancing their loans.
Sharing Views
Over the past year, Mr. Boehner worked especially closely with Sallie Mae lobbyists in spearheading efforts to defeat a bill supported by direct-loan supporters that was designed to entice colleges to enter the program.
He also pushed legislation, favored by Sallie Mae and other student-loan providers, intended to make the federal student-loan-consolidation program less attractive to borrowers by preventing them from being able to lock in low rates for up to 30 years, as they can now. Instead he backed a plan put forward by the loan industry that would have shifted the interest rate on consolidated loans to one that varies from year to year.
Mr. Boehner argued that the billions of dollars that the government provides in subsidies each year to keep the costs of fixed-rate consolidation loans cheaper for borrowers would be better spent giving more benefits to current and future students.
But lenders had another reason for pushing the proposal. Sallie Mae and other large loan providers have lost a significant share of the refinancing market to companies that specialize in consolidating student loans. In large part, they hoped that by making refinancing less appealing to borrowers, they would be able to force the consolidation companies out of the market.
Mr. Boehner, however, faced fierce opposition to that proposal from Democrats and student advocates. The final bill would continue to allow borrowers to lock in their interest rates.
Aides to Mr. Boehner have said that the congressman is a man of strong convictions, and that he is not influenced by the campaign dollars he receives. He has long been a strong opponent of direct lending, they say, and he believes that the loan-consolidation program needs to be changed to protect taxpayers.
Sallie Mae officials deny that their contributions are meant to buy influence. Instead, they say, they make donations to lawmakers who have views similar to their own.
“We are interested in supporting candidates on both sides of the aisle who understand the importance of the federal student-loan program, and the role that the private sector adds in helping students, schools, and taxpayers,” said Tom Joyce, a spokesman for the company.
But some others regard the relationship between the congressman and the loan company as suspect.
Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, says, “One can’t help but see Sallie Mae’s imprint on the substance of the legislation that Mr. Boehner’s committee has produced.”
THE STUDENT-LOAN INDUSTRY’S TOP 5 CONTRIBUTORS TO REP. JOHN A. BOEHNER Major student-loan providers have been generous supporters of Mr. Boehner, who has shepherded through Congress student-loan legislation that will affect the companies’ earnings. Contributions, by company, 2003-4 | Sallie Mae | $102,145 | Nelnet | $35,300 | Citibank | $19,500 | Union Bank & Trust | $16,000 | Wachovia Bank | $16,000 | NOTE: Figures include donations from companies’ employees and political-action committees that went to Mr. Boehner’s personal campaign account and to his leadership PAC. Lawmakers create these PAC’s, which are separate from their personal campaign accounts, so they can spread money to other candidates, especially those in tight races. | SOURCE: Federal Election Commission records obtained through PoliticalMoneyLine | |
http://chronicle.com Section: Government & Politics Volume 52, Issue 21, Page A23