Lobbying Showdown Over The Future Of Student Loans - Calling On The Lobbyists

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Published on Wednesday, 29 July 2009

Written by Danielle Knight, Huffington Post

Calling On The Lobbyists

Most Republicans support a continuing role for private student lenders. Thus the battle over Sallie Mae's future is taking place among Democrats, which is why the company turned largely to that side of K Street.

"The banks and lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists," Obama said in a weekly radio address earlier this year. "I know they're gearing up for a fight as we speak. My message to them is this: So am I."

Sallie Mae's key hire was Jamie Gorelick, a former deputy attorney general in the Clinton administration, who signed on in February to lobby White House and Education Department officials on student-loan issues. Gorelick is a partner in the Washington law firm of Wilmer, Cutler, Pickering, Hale and Dorr, which billed Sallie Mae $270,000 for its work in the first half of 2009.

Gorelick said in an interview that while she was initially hesitant to work for Sallie Mae because it had fought the Clinton administration's efforts to boost direct lending by the government, she decided to do so because Sallie Mae's plan, like Obama's, provides funding for Pell Grants. She argues that Sallie Mae's proposal is better than Obama's because "many schools need the help that [private] lenders provide in managing the flow of information, processing and reconciling changes, and educating students about their choices and how to manage debt."

In March, less than a month after hiring Gorelick, Sallie Mae retained the Podesta Group, founded by Tony Podesta, a legendary Democratic fundraiser whose brother headed the Obama transition team. In addition to Podesta himself, the firm, which was paid $110,000 for its work in the first half of the year, assigned at least four of its lobbyists to push Sallie Mae's case on Capitol Hill: Paul Brathwaite, the former executive director of the Congressional Black Caucus and a former Clinton Labor Department official; Israel "Izzy" Klein, a former aide to Sen. Charles E. Schumer of New York and Rep. Edward J. Markey of Massachusetts, both Democrats; Lauren Maddox, a former assistant secretary for communications and outreach at the Education Department in the Bush administration; and Donni Turner, a former aide to Sen. Richard Durbin of Illinois, Rep. David Scott of Georgia, and former Sen. Max Cleland of Georgia, all of them Democrats.

Sallie Mae also has tapped several other Washington lobbying firms for help, including Clark & Weinstock, Global USA, ML Strategies, and Von Scoyoc Associates, which together were paid $302,500 in the first half of 2009.

Clark & Weinstock detailed more than a third of its lobbyists to the Sallie Mae account, including Vin Weber, the firm's managing partner, a former Republican congressman from Minnesota, and a half-dozen veteran Capitol Hill staffers: James Dyer, a former staff director of the House Committee on Appropriations; Niles Godes, who most recently was chief of staff to Sen. Byron Dorgan (D-N.D.); Ed Kutler, a former senior adviser to the Speaker of the House; Peg McGlinch, who most recently was chief of staff to Rep. Tim Walz (D-Minn.); Jonathan Schwantes, a former general counsel to the Senate Judiciary Committee; Deirdre Stach, a former legislative director to Rep. Robert Walker (R-Pa.); and Sandra Stuart, a former chief of staff to Rep. Vic Fazio (D-Calif.).

Sallie Mae also has a sizable in-house lobbying staff, including six individuals who are registered on Capitol Hill. They include Carmen Guzman Lowrey, a former legislative assistant to Sen. Barbara Boxer (D-Calif.), and Brent Hartzell, a former chief of staff to the Education Department's chief financial officer.

Many of Sallie Mae's rivals in the private loan business, including Citigroup's Student Loan Corp., based in Stamford, Ct., and ,Nelnet, based in Lincoln, Neb., felt blindsided by the company's survival strategy and have been lobbying on their own to preserve much of the current system. All three companies are members of a trade association, America's Student Loan Providers, that represents originators, guarantors (including dozens of state agencies with that role), and servicers of federally guaranteed student loans.

Nelnet spent $300,000 on lobbying in the first half of this year, according to its disclosure reports. One of the company's registered lobbyists is Amy Tejral, a former legislative director for Sen. Ben Nelson (D-Neb.), who is one of the most vocal opponents of the administration's proposal.

Nelson's state is home to Nelnet, which employees about 1,000 people. The lender was the third largest contributor to Nelson's campaign committee in the 2008 election cycle, with its PAC and employees donating $49,100, according to the Center for Responsive Politics.

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