When President Barack Obama announced last year a plan to have the federal government assume direct control of all student loans, Sallie Mae, the large student lender, moved quickly to step up its lobbying game.
Fearful that the administrations plans could dramatically reduce its operations, the company sought some well-connected help, including the lobbying firm Podesta Group, and Jamie Gorelick, a partner at Wilmer, Cutler Pickering Hale and Dorr and a deputy attorney general during the Clinton years.
Since last March, Democratic insider Tony Podesta and a bipartisan team from his firm including Lauren Maddox, who was assistant secretary for communications in President George W. Bushs Education Department, and Paul Brathwaite, former executive director of the Congressional Black Caucus have been lobbying lawmakers and mobilizing support among Sallie Mae employees who fear losing their jobs.
They have been trying to persuade Congress to approve a compromise measure that would allow Sallie Mae to compete to administer the lucrative student loan business. Under Sallies plan, the government would own the student loans.
Administration officials have criticized the lobbying effort, with one official noting that Podesta was running a war room to kill the White House plan.
Podesta dismissed such a characterization, joking that it is a peace room.
Were not declaring war. Were saying, lets work this out, he said, adding that at a time when Congress was considering approving a jobs bill, Members should not be passing a layoff bill.
The lobbyist admitted that Sallie Mae faces a challenging situation in making its case on Capitol Hill and at 1600 Pennsylvania Ave.
The White House has been vigorously pressing lawmakers to complete work on legislation approved last fall by the House that would eliminate the private Federal Family Education Loan Program, a move officials argue would save taxpayers billions of dollars that could be plowed into Pell Grants and other education programs.
Education Secretary Arne Duncan recently escalated his attack on private lenders, especially singling out Sallie Mae by painting the lender as a bunch of well-paid bankers benefiting from government subsidies.
Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists the backbone of the new economy face crushing debt because of runaway college tuition, Duncan said in a statement. He accused the company of running advertising against the administrations proposals in a number of states and lobbying Congress to protect this scheme all on the taxpayers dime.
Sallie Mae spent $3.4 million on federal lobbying last year, a figure that includes $290,000 for the Podesta Group and $350,000 for Gorelicks law firm, according to lobbying records filed with Congress.
Conwey Casillas, vice president for public affairs at Sallie Mae, said the company beefed up its lobbying effort to grab the attention of lawmakers who have been preoccupied with health care reform.
In such a highly charged political environment where health care is sucking the air out of everything, we need to more effectively get through the message that we are not fighting student loan reform, he said.
He said the major difference between the two plans is that under the proposal supported by Sallie Mae, private companies would be able to bid on processing the loans. Currently, Accenture has the sole contract to administer direct government loans.
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