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Controversial Industries Have Backed Boehner

By Thomas B. Edsall
Washington Post Staff Writer
Sunday, January 29, 2006

Two controversial industries -- for-profit colleges and trade schools, and private student lenders -- have been the major sources of financing for Rep. John A. Boehner's bid to become House majority leader. Boehner has been an outspoken advocate for each interest, and has used his chairmanship to push legislation that would boost profits by millions of dollars.

Boehner (Ohio) is running against acting Majority Leader Roy Blunt (Mo.) and Republican Policy Committee Chairman John Shadegg (Ariz.) for the number two post in the House leadership. He has used his political action committee -- which he calls the "Freedom Project" -- to give GOP lawmakers at least $2.9 million over the past decade.

Boehner's ties to the two industries long had gone largely unnoticed, with coverage mostly limited to the Chronicle of Higher Education and some other education publications. Now that he is running for majority leader, his adversaries are seeking to discredit his bid and portray him as closely linked to Washington's special interest community.

"Any attempt to correlate political contributions to policy is just patently false," countered Kevin Smith, spokesman for the Education and the Workforce Committee, which Boehner chairs.

In the most recent election cycle, 2003-2004, the Freedom Project received $572,719 from individuals, according to records filed with the Federal Election Commission and analyzed by PoliticalMoneyLine. More than half of that, $292,570, came from employees and lobbyists for private student lending companies and for-profit academic institutions.

Individuals affiliated with the private student-loan industry gave the PAC $220,020, including $52,670 from officers of Sallie Mae. Sallie Mae was established in 1972 as a government-sponsored organization that over the past decade has become privatized, and is now a Fortune 500 company specializing in student loans.

Boehner's PAC received $72,550 in donations from employees and lobbyists from for-profit colleges and trade schools.

The largest single source of money from the for-profits, $17,500, was given by corporate officers and senior employees of California-based Corinthian Colleges Inc., a for-profit educational firm which disclosed eight weeks ago that the Florida attorney general is investigating a Florida subsidiary.

Boehner has sponsored legislation strongly supported by private student lenders to restrict the ability of the U.S. Department of Education to make government student loans less expensive by cutting fees. Student loans constitute a multibillion-dollar market in which the nonprofit government and for-profit private lenders compete.

During the current congressional session, Boehner's committee endorsed his legislation to allow the for-profit colleges and trade schools to gain millions of dollars in federal subsidies.

The measure would eliminate 1992 regulations designed to prevent the for-profits from signing up unqualified students and collecting student loans for tuition. Boehner would bar traditional colleges from denying credits earned at for-profits on the grounds that the for-profits are not accredited.

The Boehner proposals to deregulate the for-profit schools was strongly opposed by a coalition including the United States Student Association, American Association of Collegiate Registrars and Admissions Officers, the National Association for College Admission Counseling and the American Federation of Teachers. They cited a series of recent controversies and investigations involving the for-profit colleges.

"Boehner has been a supporter of" for-profit colleges and trade schools, and private student lenders "since he first came to Congress," said Don Seymour Jr., his press secretary. Other staff members pointed out that as a conservative Republican, Boehner believes private-sector companies subject to market forces will likely provide better and cheaper services than the government.

Critics of Boehner argue, however, that he has provided government subsidies and rules designed to give private-sector providers unfair advantages over public-sector loan and postsecondary education programs.

"The claims of being pro-free market are at complete odds with the behavior of this [Education and the Workforce] committee," said Barmak Nassirian of the American Association of Collegiate Registrars and Admissions Officers. He said Boehner showed "chutzpah" in citing competitive markets when the education committee in practice promotes a "command and control system for lenders, with guaranteed outcomes."

Robert Shireman, director of the Institute for College Access and Success and a leading advocate of the federal direct-lending program, and Luke Swarthout, higher education associate for the State Public Interest Research Groups, voiced similar criticisms.

In the race for majority leader, Blunt's extensive ties to the lobbying community also have become an issue. He worked with former House majority leader Tom DeLay (R-Tex.) to turn an army of 1,200 lobbyists into a formal arm of the GOP leadership, enlisted to help "whip" together support from lawmakers on close votes.

Blunt has a leadership PAC, Rely on Your Beliefs Fund, heavily funded by Washington interests. He also established a "527" committee that took in large corporate contributions, including $135,540 from AT&T, $110,000 from Verizon Communications and $109,452 from the Altria Group Inc. (which owns Philip Morris, the cigarette manufacturer.)

Smith, the Education Committee spokesman, defended Boehner, arguing that he is a leader in campaigns to cut the entire student loan program.

"Chairman Boehner has led efforts to reform and strengthen the federal student loan programs on behalf of students and taxpayers," Smith said. "A key component of that effort has been to reduce excess subsidies paid to lenders and demand greater program efficiency in order to free up resources to expand college access for low- and middle-income students."

The spokesman cited the budget reconciliation bill, which, he said, "cuts federal subsidies to lenders like Sallie Mae." The student-loan firm was Boehner's largest single source of campaign contributions in 2003-2004.

Smith said the measure eliminates one of the most controversial practices that allowed private lenders of government-guaranteed loans to keep the extra profits resulting from fluctuating interest rates while getting government subsidies when rate changes could have cost the lenders money.

Swarthout countered that the legislation cutting student loans maintains almost all the government guarantees to the lending industry while making "middle-class students and parents the targets of the single largest cuts" in the reconciliation bill.

Research database editor Derek Willis contributed to this report.

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