New York State Attorney General Andrew Cuomo said inappropriate relationships between student loan companies and higher education institutions are more pervasive than originally anticipated. The list of bribing loan companies and dirty college financial staffers grows as lawyers investigate.
A federal education department official was suspended from his position over the weekend after the N.Y. Attorney General revealed Matteo Fontana owned 10,500 shares of stock in Education Lending Group, the owner of Student Loan Xpress. CIT later purchased ELG for nearly $20 per share. Adding to the current round of damage control, CIT suspended the top three executives in their student loan division.
However this is only the first level of hand holding and money changing. In a back room are politicians and student loan corporate political action committees. ELG donated 100% to Republican candidates in the last election. The company's PAC contributors included a number of Student Loan Xpress executives. Randy “Duke” Cunningham received $5,000 from ELG for his last election run.
In addition ELG’s campaign reports show a $10,000 donation to “Committee for a Democratic”, 611 Pennsylvania Avenue SE Suite 243, Washington, D.C. 20003. Unable to find a PAC with such a name, I searched the address to find it belongs to Shockley Public Strategies Inc. Leslie Beyer, a Republican with strong Texas and Bush White House roots serves as principal for the firm.
Leslie left the Executive Office of the President in 2002. Did she accept the check for $10,000 from Education Lending Group PAC in July of 2003? Did Mrs. Beyer put it to work to get her ex-boss reelected to the White House? If she didn’t get the check, who did? And where did it end up? How was the Student Loan Xpress money washed through the political system?
It’s becoming clearer whose sleeping with whom in the education/student loan arena. The question is what happened in the back room? What monies or stock offerings greased the skids for private loan companies to make out like bandits off our kids higher education loans? Hopefully Andrew Cuomo is pursuing this side of the equation. However, if he has future political aspirations he might not. Both Democrats and Republicans work hard for their chance to gorge at the corporate money campaign trough. Huge student loan lender Sallie Mae contributed almost $1.6 million over the last three election cycles, with Republicans having a slight edge over Democrats.
Privatization means more companies perform duties branches of government used to conduct. That the companies show their appreciation by donating to political campaigns is just freedom of speech. Funny how the recipients are then free to support bills that benefit their donors. When some malfeasaonce is found, a few bad eggs are tossed ceremoniously. Why don't leaders ask what systems created this widespread bad behavior?
Student loan companies cheat on a broad scale to grow the business while CEO's cheat on their incentive pay by backdating stock options on a widespread basis. Want to bet only a few fall in either category? Andrew Cuomo is already talking settlement with a "significant" student loan lender. My guess is a hefty fine and a few sacrificial firings will do the trick. Sound familiar? It should in our "banana republic".