Guess who tied for the single largest individual campaign contribution to the National Republican Congressional Committee (NRCC) in 2006? The Nelnet student loan corporation's top three executives. Guess which company provided the single, largest corporate donation to the NRCC? Yup, Nelnet. Not a pharmaceutical company or tobacco company or oil company. Nope, a student loan company.
Nelnet and its people gave over $150,000 just to the NRCC in 2006. Of course, that's to say nothing of all Nelnet's giving to other Congressional PACs, Members, and parties. All totaled, Nelnet gave almost $500,000 to Congressional candidates and parties (78% to Republicans, 22% to Democrats).
Don Bouc (pronounced Boats), Nelnet's President, Mike Dunlap and Stephen Butterfield, Nelnet's Co-CEOs gave over $80,000 on the same day in 2006 to the NRCC. They made other contributions in 2006 as well, but February 22nd was a good day for the Republican Congressional Campaign Committee.
What's really interesting though is how anomalous the 2006 giving is for Nelnet. In 2004 and 2005, Nelnet's top three executives each only gave $5,000 to the NRCC. Why the change?
Nelnet knew in early 2006 it had major problems, because they knew the Department of Education's Inspector General (IG) was conducting an audit of the company's student loan billing and they knew that they faced over $1 billion in exposure. In fact, the IG issued a report in September 2006 calling for Nelnet to give up $1.2 billion in illegally claimed taxpayer subsidy payments.
Whether to force the company to give the money back is a decision that rests now with the Department of Education's political leadership. It's hard to bribe Administration officials on a billion dollar decision, although Nelnet placed a good bet on this newly named Department of Education higher up who headed a charitable foundation that Nelnet gave $50,000 to in July 2006. But it's much easier to, err, influence Congress through campaign contributions. And so the company placed a near $500,000 bet on friends who have defended their billing in the past.
That wouldn't be so bad if Nelnet's Congressional bet weren't in effect taxpayer money. Follow the sequence of events:
1) Nelnet rips off the U.S. Treasury by exploiting an egregious student loan subsidy that everyone thinks is indefensible. They bilk taxpayers for hundreds of millions and have them on the hook for almost $1 billion more.
2) There's an effort to cut off Nelnet and the Congressional Republican leadership objects. Ultimately, they lose, but only prospectively. There's still the question of whether Nelnet will be able to keep more than $1.2 billion in improper taxpayer payments.
3) In order to keep the money machine going, Nelnet kicks back a piece of the hundreds of millions in taxpayer subsidy money to Congressional Republicans who have worked to help them in the past.
Now the decision by the Department of Education's political leadership as to whether Nelnet actually has to give up its $1.2 billion in improperly claimed taxpayer subsidies will be made after next Tuesday's election. We speculate that Nelnet's "friends" in Congress have tried or will try to influence the Department's decision or they simply will not conduct much oversight of the Department if it lets Nelnet slide.
But what if folks critical of Nelnet's bilking take power? Well, we suspect Nelnet will try to cut a deal with the Department of Education. It's why Nelnet's CEO has said things to Wall Street like the company will "work with the Department to resolve the matter."
That's code for settlement. The terms better be very good for taxpayers or one of these two men may flex some Congressional oversight muscle.