December, 2017
Washington -- The Chronicle of Higher Education has outed me; I'm a "university professor." Which is more or less true, as I have taught many years in the classroom, undergraduate and graduate.
This reminds me of the line uttered by the late Daniel Patrick Moynihan when he was in an election contest for the U.S. Senate. His opponent called him "Professor Moynihan," to which Moynihan replied, "The mud-slinging has begun." (I knew the professor and senator, as I sat behind him for five years in meetings of the Senate Budget Committee.)
All of which gives me occasion to conduct a college class discussion, via this blog post, in Public Administration 101, or perhaps 401 if the course is for graduate credit. The topic is "iron triangles."
An iron triangle at either the state or federal level is a lobbying association's dream, always sought and often achieved. One corner is the lobbying group; another is the staff of an elected official in the legislative branch with jurisdiction over the subject area; in the third corner are the officials in the executive branch who administer the relevant government programs.
The goal is to get the lobbying association's own people in charge of all the corners. This is done by means of the "revolving door," through which like-minded people sympathetic to the lobby group fill and then rotate among the corner positions, moving from one to another as opportunities arise.
The Pennsylvania student loan lender and secondary market PHEAA achieved an iron triangle in 2002. Its Washington lobbying association, the Education Finance Council, was led by a former PHEAA employee, Kathleen Smith, and governed by a board with PHEAA membership. The House of Representative's authorizing committee with jurisdiction over student loans was chaired by a Pennsylvania congressman, William Goodling, through 2001; he had hired former PHEAA employees as staff and they were retained by his successor. One of the committee staff, Sally Stroup, former PHEAA chief counsel, soon went over to the U.S. Department of Education to be an assistant secretary in charge of student loan policy. Already waiting at the Department was an undersecretary (later deputy secretary), Eugene Hickok, who had been a PHEAA board member when he was a Pennsylvania government official.
The iron triangle was therefore established and staffed. The only question remaining was how PHEAA would turn its good fortune into gold, so to speak.
It soon came up with a scheme, outlined by the CFO, Timothy Guenther, to its incoming CEO, Richard Willey, in May of 2002, to move student loans around among different tax-free and taxable bond estates to claim a windfall of extra federal taxpayer subsidies. The scheme would even have the loans wind up in a location where PHEAA could avoid any "excess interest" penalties under U.S. Treasury regulations, so PHEAA could put the money to any purpose it wanted, including big bonuses and retirement packages for its executives. Although the CFO said this too-good-to-be-true scheme was allowed under government regulations, PHEAA never sought opinion of counsel, never asked the Department of Education if it was legal, and in fact internally cautioned against anyone at PHEAA asking the Department if the scheme was proper, for fear of getting an answer that it was not.
CFO Timothy Guenther's memo had a note of caution. PHEAA shouldn't do too much of the scheme for fear of "political" ramifications. Meaning, of course, someone might notice. Nevertheless, Richard Willey, soon to be CEO, quickly told his CFO to "maximize" the revenue from the scheme.*
Working as a researcher at the Institute of Education Sciences, I noticed about a year later that PHEAA's payments were going up rapidly and asked the Office of Inspector Gereral to look into it. A few weeks after that, U.S. News and World Report contacted me about a cover story they were writing, entitled "Big Money on Campus." I told them they had a good story and should check out how excess subsidies were distorting the student loan markets. They did and included the observation in one of their articles.
After the story appeared, the aforementioned assistant secretary, formerly of PHEAA, formerly of the House committee staff, announced from a stage at a student financial aid conference that whatever U.S. News was talking about, "it's all legal." No one seems to remember exactly what the question from the audience was, but her answer was quickly published by the lobbying association's newsletter, published by the former PHEAA person who worked there.
Did the assistant secretary have Departmental clearance to make such an announcement? No, she later testified under oath in a deposition. No matter. Her statement that "it's all legal" circulated throughout the student loan industry, and soon nine other lenders and secondary markets were participating in the scheme. When I alerted the Government Accountability Office (GAO) a few weeks later, GAO wrote a report to Congress that indicated billions of dollars were at stake and that the scheme had to be cut off as soon as possible.
GAO said there were three ways to cut it off: Congressional action; new Department regulations; or simply clarification of existing regulations to make it clear the scheme was never allowed. The third option was one that I had recommended to the Department and the one Secretary Margaret Spellings eventually chose to kill the scheme, after the Department's Inspector General informed her that the scheme had never been legal. In the meantime, Congress acted to cut off the scheme prospectively.
Eventually the iron triangle collapsed. Deputy Scretary Hickok was caught holding stock in a bank while regulating it. Assistant Secretary Stroup was returned by Secretary Margaret Spellings to the House staff from which she came, (but only after she passed along information to PHEAA as to how to prepare for the Inspector General's audit). Another government employee with a student loan industry background, Matteo Fontana, who had supervised program reviews that somehow always overlooked legal problems with the scheme, was suspended, convicted, and fined for accepting stock in a student loan lender while supposedly regulating the industry. His boss, Terri Shaw, the COO of the Office of Federal Student Aid who paid the illegal claims for years from taxpayer dollars, without question, was not retained by Secretary Spellings when her appointment expired.
The extra revenue for PHEAA during the heyday of the iron triangle almost sank the company. When the Pennsylvania Auditor General, Jack Wagner, looked at PHEAA, he concluded that spending on perks and bonuses were so excessive that PHEAA had lost sight of its mission, which supposedly was to provide students with financial aid. He recommended changing the PHEAA board structure; Richard Willey resigned as CEO in the face of public outcry.** Pennsylvania Governor Ed Rendell was so incensed he tried to sell PHEAA to rival private company Sallie Mae.
All's well that ends well? No. In 2017, through discovery, we found the 2002 PHEAA internal memo that set off the whole scheme. PHEAA had told the OIG during its audit that no such document existed, that it had provided all its records dealing with its claims. PHEAA's CFO gave a deposition under oath that denied the existence of such a plan. The 2017 evidence showed that testimony to be false. No matter. When a jury was asked if PHEAA should return the illegally claimed money, which our expert witnesses put at $116.5 million and PHEAA did not dispute, the jury declined to get it back. Only the jury knows the reasons for its decision, but surely it had to do with the "it's all legal" statement by the assistant secretary as she moved through the iron triangle.
So that's today's class lesson in Public Administration 101/401 from a "university professor." There will not be a test on this material unless you think of this discussion the next time you go to the polls.
Note to my colleagues in academe: feel free to use this example the next time you teach about iron triangles.
__________________
* These records, uncovered by legal discovery in 2017, were public evidence at the trial of PHEAA in federal district court, just completed.
** Pennsylvania Auditor General Jack Wagner wrote: "PHEAA was governed and managed within a culture that sometimes allowed self-reward to supersede fiscal prudence. In those instances, PHEAA failed its mission by not using all available resources to benefit Pennsylvania students." Unfortunately, this report was not allowed into evidence in the PHEAA trial and the jury never saw it, but it can be read here.
Highest Praise, Part III
December, 2017
Washington -- This is part three of my "Highest Praise" series of posts, to give credit where credit is due for courageous and selfless actions to expose waste, fraud, and abuse in federal student loan programs. Standing in the shoes of the U.S. government through the False Claims Act, we were able to recover over $70 million of false claims for the U.S. Treasury, succeeding in seven of nine lawsuits. Part I gives credit to the legal team at Wiley Rein; Part II gives credit to the Office of Inspector General. Without them, there would have been no chance for success.
Now it is time to give credit to the trade press, especially reporters at The Chronicle of Higher Education, and to dedicated people at the New America Foundation, a Washington think tank.
At the Chronicle, reporters wrote story after story of corruption in the student loan industry. Among those was the story of how lenders and secondary markets made false subsidy claims on loans that guaranteed them a 9.5% return on loans, as opposed to the subsidy rate that by law they were supposed to get, which was much less and at times nothing. The secondary markets did this by moving loans in and out of different tax-exempt and taxable bond estates, a process some of them (behind closed doors) called "washing" and others called "dipping." It was all illegal. The reporters wrote about how the funds illegally claimed were used to create illegal inducements for colleges to push their students into loans offered by favored lenders, all while the Department of Education looked the other way.
Lenders and secondary markets did not like the articles and pressed Chronicle editors and management to fire or reassign reporters. Did they succeed? Discovery in my lawsuit against the lender PHEAA sheds light on it all. Discovery documents are now in the process of being sorted and archived to determine if the public can soon have the answers to such questions.*
Meanwhile, authors of the New America Foundation's blog, "Higher Ed Watch," also wrote about corruption in the industry. Steve Burd discovered that lenders offered bribes to college financial aid officers. He took names. He also discovered that an official at the Department of Education responsible for enforcement of statutes and regulations was given stock in a lender. This official was also suspected of giving lenders access to the Department's data bases of borrowers, so that lenders could contact borrowers directly to get them to switch their lucrative loans into the bank-based loan program, FFEL, through loan consolidation. A whole new branch of the student loan industry, employing thousands, grew up to take advantage.
In 2010, a Texas lender and secondary market that I sued, Panhandle Plains, subpoenaed New America for its records, to see if there was a connection between me and the foundation. New America at first resisted, but I was pleased to see the prospect of even more documents about the 9.5 scandal come to light, for any and all to see. The head of New America at the time, Steve Coll, a two time winner of the Pulitzer Prize and now the dean of the Graduate School of Journalism at Columbia University, consented to release the papers in question. Several of the emails and notes at issue were introduced in the recent trial of PHEAA as evidence and will soon be available for the public to review. It is my position that the public should be able to see every scrap of paper relating to the 9.5 scandal, although some lender documents unfortunately will never see the light of day because of 2010 settlement agreements requiring their destruction in exchange for the recovery of funds to the Treasury.
The work of the trade press and New America was important to the ultimate success of the lawsuits. I cannot thank those authors enough for standing up to pressure, even at the risk of their careers and reputations.
Although other newspapers are certainly strong enough to protect their reporters, I should also say that long articles by Sam Dillon of the New York Times and John Hechinger and Ann Marie Chaker of the Wall Street Journal, both in 2007, were of great value in telling the story of the false lender claims and the culture of indulgence for them at the Department of Education.
This is a good time to reveal my own sense of relief in 2016 when the lender PHEAA hired the former solicitor general of the U.S., Paul Clement, to represent it for argument in the 4th Circuit (and later the Supreme Court), against us on the issue of PHEAA's claimed sovereign immunity. Not that he wouldn't be a formidable new force in the case, of course, but I was relieved that the lender's enormous resources would be directed to legal talent, not to shadier purposes. (I have seen lenders' loan collectors ruin four generations of a family in one case, unfortunately not unique.) More than once in this lawsuit did friends ask me if I felt in danger personally, with hundreds of millions of dollars at stake. I certainly felt uneasy having the sense of being followed around for ten years when giving talks and lectures (excerpts of which appear in PHEAA's trial evidence, now for all to see, I'm happy to report), and I felt uneasy when meeting consumer advocates or writing on topics of national higher education policy in this blog.
I am of course pleased that my team at Wiley Rein won the battle with Paul Clement and PHEAA over sovereign immunity, purely at the intellectual level. And that any blood spilled was only symbolic, and theirs.
_____________________
* PHEAA also tried to stop my investigation of their false claims, asking officials at the Department of Education in 2006 if there was any way to stop me from speaking about the investigation. The answer to that from the Department is also in the discovery documents.
Washington -- This is part three of my "Highest Praise" series of posts, to give credit where credit is due for courageous and selfless actions to expose waste, fraud, and abuse in federal student loan programs. Standing in the shoes of the U.S. government through the False Claims Act, we were able to recover over $70 million of false claims for the U.S. Treasury, succeeding in seven of nine lawsuits. Part I gives credit to the legal team at Wiley Rein; Part II gives credit to the Office of Inspector General. Without them, there would have been no chance for success.
Now it is time to give credit to the trade press, especially reporters at The Chronicle of Higher Education, and to dedicated people at the New America Foundation, a Washington think tank.
At the Chronicle, reporters wrote story after story of corruption in the student loan industry. Among those was the story of how lenders and secondary markets made false subsidy claims on loans that guaranteed them a 9.5% return on loans, as opposed to the subsidy rate that by law they were supposed to get, which was much less and at times nothing. The secondary markets did this by moving loans in and out of different tax-exempt and taxable bond estates, a process some of them (behind closed doors) called "washing" and others called "dipping." It was all illegal. The reporters wrote about how the funds illegally claimed were used to create illegal inducements for colleges to push their students into loans offered by favored lenders, all while the Department of Education looked the other way.
Lenders and secondary markets did not like the articles and pressed Chronicle editors and management to fire or reassign reporters. Did they succeed? Discovery in my lawsuit against the lender PHEAA sheds light on it all. Discovery documents are now in the process of being sorted and archived to determine if the public can soon have the answers to such questions.*
Meanwhile, authors of the New America Foundation's blog, "Higher Ed Watch," also wrote about corruption in the industry. Steve Burd discovered that lenders offered bribes to college financial aid officers. He took names. He also discovered that an official at the Department of Education responsible for enforcement of statutes and regulations was given stock in a lender. This official was also suspected of giving lenders access to the Department's data bases of borrowers, so that lenders could contact borrowers directly to get them to switch their lucrative loans into the bank-based loan program, FFEL, through loan consolidation. A whole new branch of the student loan industry, employing thousands, grew up to take advantage.
In 2010, a Texas lender and secondary market that I sued, Panhandle Plains, subpoenaed New America for its records, to see if there was a connection between me and the foundation. New America at first resisted, but I was pleased to see the prospect of even more documents about the 9.5 scandal come to light, for any and all to see. The head of New America at the time, Steve Coll, a two time winner of the Pulitzer Prize and now the dean of the Graduate School of Journalism at Columbia University, consented to release the papers in question. Several of the emails and notes at issue were introduced in the recent trial of PHEAA as evidence and will soon be available for the public to review. It is my position that the public should be able to see every scrap of paper relating to the 9.5 scandal, although some lender documents unfortunately will never see the light of day because of 2010 settlement agreements requiring their destruction in exchange for the recovery of funds to the Treasury.
The work of the trade press and New America was important to the ultimate success of the lawsuits. I cannot thank those authors enough for standing up to pressure, even at the risk of their careers and reputations.
Although other newspapers are certainly strong enough to protect their reporters, I should also say that long articles by Sam Dillon of the New York Times and John Hechinger and Ann Marie Chaker of the Wall Street Journal, both in 2007, were of great value in telling the story of the false lender claims and the culture of indulgence for them at the Department of Education.
This is a good time to reveal my own sense of relief in 2016 when the lender PHEAA hired the former solicitor general of the U.S., Paul Clement, to represent it for argument in the 4th Circuit (and later the Supreme Court), against us on the issue of PHEAA's claimed sovereign immunity. Not that he wouldn't be a formidable new force in the case, of course, but I was relieved that the lender's enormous resources would be directed to legal talent, not to shadier purposes. (I have seen lenders' loan collectors ruin four generations of a family in one case, unfortunately not unique.) More than once in this lawsuit did friends ask me if I felt in danger personally, with hundreds of millions of dollars at stake. I certainly felt uneasy having the sense of being followed around for ten years when giving talks and lectures (excerpts of which appear in PHEAA's trial evidence, now for all to see, I'm happy to report), and I felt uneasy when meeting consumer advocates or writing on topics of national higher education policy in this blog.
I am of course pleased that my team at Wiley Rein won the battle with Paul Clement and PHEAA over sovereign immunity, purely at the intellectual level. And that any blood spilled was only symbolic, and theirs.
_____________________
* PHEAA also tried to stop my investigation of their false claims, asking officials at the Department of Education in 2006 if there was any way to stop me from speaking about the investigation. The answer to that from the Department is also in the discovery documents.
Highest Praise, Part II
December, 2017
Washington -- Citizens and taxpayers can sleep better, as a general rule, knowing that each department of the federal government has an independent Office of Inspector General, which audits the respective departments to seek out waste, fraud, and abuse. The Inspector General at the U.S. Department of Education over the years has done some remarkable work, for which the IG and staff should be commended.
Some of this work has to do with the so-called 9.5% loan scandal, in which student loan lenders falsely claimed subsidy returns guaranteeing them a total return of 9.5% on student loans, when in fact, according to the Inspector General, they were legally entitled only to a lower subsidy rate, or none at all.
These excess subsidy payments, growing toward billions of federal taxpayer dollars, worked their way into the whole student loan system. Lenders getting the extra subsidies started paying higher premuims in the student loan secondary markets to banks that originated student loans, driving up loan prices and lender profits all around.
Lenders not making the false claims and paying the loan premiums were disadvantaged. Some lenders and secondary markets held out on grounds that the loan washings between bond estates, used to make the false claims, were illegal. But some of them switched to making the claims, for fear of being driven out of business if they didn't, and were thereby corrupted.
What the Inspector General did:
• While all of this was going on, the IG assisted in looking at who in the Department of Education had conflicts of interest. They found Deputy Secretary Eugene Hickok, who had been required to sell off his stock in student loan lenders Wachovia, Citigroup, Key Bank, and Bank of America while his Department was regulating the student loan system. He was also a former member of the board of PHEAA, a lender and secondary market which, discovery in a lawsuit has since shown, pioneered the way to make the illegal, high-subsidy claims. Hickok did not sell off his BoA stock as required, was fined $50,000 in federal district court, and quietly left government in early 2005 as Margaret Spellings succeeded Rod Paige as Secretary of Education. As he left, Hickok said he would never work in government again, trying to leave the impression that he was disgusted with it, rather than the fact that the government itself was showing him the door.
• Starting in 2005, the Inspector General started a series of audits of nonprofit secondary markets in New Mexico, Pennsylvania, and Kentucky, and audits of for-profit secondary markets Nelnet, Sallie Mae, and Nellie Mae (which had been bought by Sallie Mae). The IG concluded that none of these entities was entitled to all the subsidies they were claiming, and recommended to Secretary Spellings that she seek the overpayments back. She did not, but chose rather to require independent audits going forward, to sort out legal from illegal claims. One of the IG's audits was given the prestigious Alexander Hamilton award by the Executive Council on Integrity and Efficiency. It was a remarkable audit and the award was richly deserved. Presentation of the award was made by a close personal friend of the President, making clear that the White House was on the side of the IG and did not want to be associated with the scandal of the wrongfully paid subsidies, even as many of the lenders were making political contributions to elected officials to try to overturn the audits of the IG.
• In 2006, at the same time the award-winning audit was released, the Inspector General issued a report critical of the Office of Federal Student Aid (FSA), the office that had paid the claims to which the IG took exception. The report, written by Helen Lew, found the FSA personnel poorly trained and more interested in forming partnerships with financial institutions than in assuring compliance with statutes and regulation. It even discovered an instance of an FSA employee providing a pre-decisional document to a secondary market, which then tried to use the document to get a court injunction against the OIG. When the time came for Secretary Spellings to renew or replace the COO of FSA, which had paid the illegal claims, she understandably chose to replace her.
• In 2007, thanks to the investigative work of the New America Foundation, it was revealed that some lenders were making illegal payments and gifts to college student financial aid officers in order to get their business. The financial aid officers at Columbia University, the University of Texas - Austin, the University of Southern California, and Johns Hopkins University were fired by their institutions. It was also discovered that a Department official, Matteo Fontana, was holding stock in one such lender (Student Loan XPress) while overseeing the staff of program reviewers who were supposed to be checking the lenders for compliance with federal regulations. After a review by the IG, this individual was suspended, charged, and ultimately dismissed from the government with a fine of over $100,000.
• In 2017, in preparation for a false claims lawsuit against PHEAA (see previous posts), Howard Sorensen of the Inspector General's office gave a deposition on the award-winning audit. He gave an award-worthy deposition, as he was involved directly in all the audits. A colleague of his gave testimony at the jury trial of PHEAA, stating under oath that PHEAA had not given up key documents to the IG during its 2006 audit, and had actually denied their existence. It was only through the discovery process in 2017 that the documents ever came to light.
Can citizens and taxpayers sleep better because the Inspector General at the Department of Education is on duty? Yes. But of course there is an epilogue to all of the above. The jury in the PHEAA case delivered a verdict that did not require PHEAA to return funds from its false claims, presumably on grounds that the Department of Education knew all along what PHEAA was doing and paid its claims for years, until the IG's audit. That made it reasonable in the minds of the jury that PHEAA did not know its claims were false, even if PHEAA hid documents.
Stell dir das mal vor!
The fact that PHEAA will not be paying any money back is not the fault of the Office of Inspector General. It did its work, and did it well. If anyone is losing sleep, it is likely to be OIG personnel worried about what is still going on in the rest of the Department.* Waste, fraud, and abuse, even when identified, are hardy perennials, never to be fully rooted out.
_____________________________
* Even as this is being posted, the Department is undermining the so-called gainful employment regulations that are designed to protect consumers from shoddy colleges that have high borrower loan default rates. In a report to Congress, the OIG writes,"On gainful employment, we did not agree with the Department’s decision to delay a provision requiring schools to provide consumer protection disclosures directly to students before they enroll and Federal student aid funds are committed or disbursed." This blow against consumers by the Department will cost taxpayers millions as borrowers go increasingly into student loan default. It will ruin the lives of many students and their families. For the victims of these schools, the outcomes will be nothing short of tragic.
Washington -- Citizens and taxpayers can sleep better, as a general rule, knowing that each department of the federal government has an independent Office of Inspector General, which audits the respective departments to seek out waste, fraud, and abuse. The Inspector General at the U.S. Department of Education over the years has done some remarkable work, for which the IG and staff should be commended.
Some of this work has to do with the so-called 9.5% loan scandal, in which student loan lenders falsely claimed subsidy returns guaranteeing them a total return of 9.5% on student loans, when in fact, according to the Inspector General, they were legally entitled only to a lower subsidy rate, or none at all.
These excess subsidy payments, growing toward billions of federal taxpayer dollars, worked their way into the whole student loan system. Lenders getting the extra subsidies started paying higher premuims in the student loan secondary markets to banks that originated student loans, driving up loan prices and lender profits all around.
Lenders not making the false claims and paying the loan premiums were disadvantaged. Some lenders and secondary markets held out on grounds that the loan washings between bond estates, used to make the false claims, were illegal. But some of them switched to making the claims, for fear of being driven out of business if they didn't, and were thereby corrupted.
What the Inspector General did:
• While all of this was going on, the IG assisted in looking at who in the Department of Education had conflicts of interest. They found Deputy Secretary Eugene Hickok, who had been required to sell off his stock in student loan lenders Wachovia, Citigroup, Key Bank, and Bank of America while his Department was regulating the student loan system. He was also a former member of the board of PHEAA, a lender and secondary market which, discovery in a lawsuit has since shown, pioneered the way to make the illegal, high-subsidy claims. Hickok did not sell off his BoA stock as required, was fined $50,000 in federal district court, and quietly left government in early 2005 as Margaret Spellings succeeded Rod Paige as Secretary of Education. As he left, Hickok said he would never work in government again, trying to leave the impression that he was disgusted with it, rather than the fact that the government itself was showing him the door.
• Starting in 2005, the Inspector General started a series of audits of nonprofit secondary markets in New Mexico, Pennsylvania, and Kentucky, and audits of for-profit secondary markets Nelnet, Sallie Mae, and Nellie Mae (which had been bought by Sallie Mae). The IG concluded that none of these entities was entitled to all the subsidies they were claiming, and recommended to Secretary Spellings that she seek the overpayments back. She did not, but chose rather to require independent audits going forward, to sort out legal from illegal claims. One of the IG's audits was given the prestigious Alexander Hamilton award by the Executive Council on Integrity and Efficiency. It was a remarkable audit and the award was richly deserved. Presentation of the award was made by a close personal friend of the President, making clear that the White House was on the side of the IG and did not want to be associated with the scandal of the wrongfully paid subsidies, even as many of the lenders were making political contributions to elected officials to try to overturn the audits of the IG.
• In 2006, at the same time the award-winning audit was released, the Inspector General issued a report critical of the Office of Federal Student Aid (FSA), the office that had paid the claims to which the IG took exception. The report, written by Helen Lew, found the FSA personnel poorly trained and more interested in forming partnerships with financial institutions than in assuring compliance with statutes and regulation. It even discovered an instance of an FSA employee providing a pre-decisional document to a secondary market, which then tried to use the document to get a court injunction against the OIG. When the time came for Secretary Spellings to renew or replace the COO of FSA, which had paid the illegal claims, she understandably chose to replace her.
• In 2007, thanks to the investigative work of the New America Foundation, it was revealed that some lenders were making illegal payments and gifts to college student financial aid officers in order to get their business. The financial aid officers at Columbia University, the University of Texas - Austin, the University of Southern California, and Johns Hopkins University were fired by their institutions. It was also discovered that a Department official, Matteo Fontana, was holding stock in one such lender (Student Loan XPress) while overseeing the staff of program reviewers who were supposed to be checking the lenders for compliance with federal regulations. After a review by the IG, this individual was suspended, charged, and ultimately dismissed from the government with a fine of over $100,000.
• In 2017, in preparation for a false claims lawsuit against PHEAA (see previous posts), Howard Sorensen of the Inspector General's office gave a deposition on the award-winning audit. He gave an award-worthy deposition, as he was involved directly in all the audits. A colleague of his gave testimony at the jury trial of PHEAA, stating under oath that PHEAA had not given up key documents to the IG during its 2006 audit, and had actually denied their existence. It was only through the discovery process in 2017 that the documents ever came to light.
Can citizens and taxpayers sleep better because the Inspector General at the Department of Education is on duty? Yes. But of course there is an epilogue to all of the above. The jury in the PHEAA case delivered a verdict that did not require PHEAA to return funds from its false claims, presumably on grounds that the Department of Education knew all along what PHEAA was doing and paid its claims for years, until the IG's audit. That made it reasonable in the minds of the jury that PHEAA did not know its claims were false, even if PHEAA hid documents.
Stell dir das mal vor!
The fact that PHEAA will not be paying any money back is not the fault of the Office of Inspector General. It did its work, and did it well. If anyone is losing sleep, it is likely to be OIG personnel worried about what is still going on in the rest of the Department.* Waste, fraud, and abuse, even when identified, are hardy perennials, never to be fully rooted out.
_____________________________
* Even as this is being posted, the Department is undermining the so-called gainful employment regulations that are designed to protect consumers from shoddy colleges that have high borrower loan default rates. In a report to Congress, the OIG writes,"On gainful employment, we did not agree with the Department’s decision to delay a provision requiring schools to provide consumer protection disclosures directly to students before they enroll and Federal student aid funds are committed or disbursed." This blow against consumers by the Department will cost taxpayers millions as borrowers go increasingly into student loan default. It will ruin the lives of many students and their families. For the victims of these schools, the outcomes will be nothing short of tragic.
To Borrowers Who Have Contacted Me For Help
December, 2017
Washington -- In case it appears from the last few posts that I am down on all student loan lenders, guarantors, and servicers, let me balance that with a few words of appreciation for good outfits.
There are bad apples and good apples in any business. In the student loan industry, there are several previously good apples that have gone bad, corrupted. Then there are bad apples that somehow miraculously became good. (I am thinking of one in particular that, after a bad experience, put new and credible people on its board, diversified, and is now even bringing a good apple into its business; time will tell if I am right.)
One good apple in the business, I have always felt, is American Student Assistance of Massachusetts. Allesandra Lanza of ASA is a contributor to web pages that give truly useful advice to borrowers. When borrowers are at their wits' end and don't know where to turn for help, she offers good links to explore. She is also brutally honest about the shortcomings of loan servicers when she writes that in the face of
"growing concerns that student loan servicers aren't always looking out for borrowers' best interests, it's never been more important for student loan consumers to stay informed on their rights and protections."
In other words, buyer beware. If you think your loan servicer is being straight with you, as opposed to looking out for how it can make more bucks off you, think again. One servicer, Navient, has even blurted out, “There is no expectation that the servicer will act in the interest of the consumer." Take that, borrowers.
Now, to all borrowers who have contacted me, hoping I can help them (and I dearly wish I could), let me pass on the suggestions of Allesandra Lanza as to sources of help that you may not have considered. Click on the link in the preceding sentence. Here is what you will see, in part:
• State attorneys general: If your state has not enacted any student loan protections on its own, the attorney general's office is a good place to learn more about your rights as a borrower.
For example, in Massachusetts, Attorney General Maura Healey has established a Student Lending Assistance Unit that provides a hotline and free mediation service to borrowers who are having difficulties with student loans.
• Consumer Financial Protection Bureau: This bureau continuously collects student loan borrowers' complaints, investigates trends and regularly issues reports on its findings. In addition to forwarding complaints about the company handling your loan so that it can hopefully resolve the issue, the CFPB may also use your feedback to inform its rule-making process as it creates and enforces federal consumer financial laws.
• Consumer advocates: A number of consumer advocacy organizations work on behalf of student loan borrowers.
Two prominent ones are the National Consumer Law Center's Student Loan Borrower Assistance Project and the Project on Predatory Student Lending out of Harvard Law School. Both groups offer direct assistance to borrowers, as well as frequently integrate testimony from their clients when they participate in student loan policy discussions and debate.
• Your congressional representatives: Of course, there's always the tried-and-true method of contacting your congressional representatives in Washington, D.C. You can find contact information for the House of Representatives and Senate and then raise your concerns with each representative's office.
Washington -- In case it appears from the last few posts that I am down on all student loan lenders, guarantors, and servicers, let me balance that with a few words of appreciation for good outfits.
There are bad apples and good apples in any business. In the student loan industry, there are several previously good apples that have gone bad, corrupted. Then there are bad apples that somehow miraculously became good. (I am thinking of one in particular that, after a bad experience, put new and credible people on its board, diversified, and is now even bringing a good apple into its business; time will tell if I am right.)
One good apple in the business, I have always felt, is American Student Assistance of Massachusetts. Allesandra Lanza of ASA is a contributor to web pages that give truly useful advice to borrowers. When borrowers are at their wits' end and don't know where to turn for help, she offers good links to explore. She is also brutally honest about the shortcomings of loan servicers when she writes that in the face of
"growing concerns that student loan servicers aren't always looking out for borrowers' best interests, it's never been more important for student loan consumers to stay informed on their rights and protections."
In other words, buyer beware. If you think your loan servicer is being straight with you, as opposed to looking out for how it can make more bucks off you, think again. One servicer, Navient, has even blurted out, “There is no expectation that the servicer will act in the interest of the consumer." Take that, borrowers.
Now, to all borrowers who have contacted me, hoping I can help them (and I dearly wish I could), let me pass on the suggestions of Allesandra Lanza as to sources of help that you may not have considered. Click on the link in the preceding sentence. Here is what you will see, in part:
• State attorneys general: If your state has not enacted any student loan protections on its own, the attorney general's office is a good place to learn more about your rights as a borrower.
For example, in Massachusetts, Attorney General Maura Healey has established a Student Lending Assistance Unit that provides a hotline and free mediation service to borrowers who are having difficulties with student loans.
• Consumer Financial Protection Bureau: This bureau continuously collects student loan borrowers' complaints, investigates trends and regularly issues reports on its findings. In addition to forwarding complaints about the company handling your loan so that it can hopefully resolve the issue, the CFPB may also use your feedback to inform its rule-making process as it creates and enforces federal consumer financial laws.
• Consumer advocates: A number of consumer advocacy organizations work on behalf of student loan borrowers.
Two prominent ones are the National Consumer Law Center's Student Loan Borrower Assistance Project and the Project on Predatory Student Lending out of Harvard Law School. Both groups offer direct assistance to borrowers, as well as frequently integrate testimony from their clients when they participate in student loan policy discussions and debate.
• Your congressional representatives: Of course, there's always the tried-and-true method of contacting your congressional representatives in Washington, D.C. You can find contact information for the House of Representatives and Senate and then raise your concerns with each representative's office.
Highest Praise, Part I
December, 2017
Washington -- Coming off ten years of lawsuits against student loan lenders in which our overall record is 7-1-1, it's time to give credit where credit is due: mostly to the law firm of Wiley Rein (and, through 2010, the TELG law group). Tens of millions of dollars of repayments of false lender claims have come back to the U.S. Treasury. Students and families themselves now have new opportunities to challenge lenders and servicers for their errors, when often before they had no recourse. And sunshine has broken through to show how the shadowy side of the student loan system really works.
Think of the legal victories:
• Settlements with seven lenders, which not only got many millions back for taxpayers, but sent a strong message that false claims have consequences. False claims can be attempted, but at lenders' peril. The false claims between 2002 and 2006 in these cases obviously played a role in the decision by Congress in 2010 to kill the expensive, bank-based student loan system, FFEL. That freed up savings of over $30 billion for students, over subsequent years, in the form of additional grants, not loans. Think of it, $30 billion for financially needy students!
• A victory at the U.S. Supreme Court level, to confirm a 4th Circuit decision that a tax-exempt lender could not hide behind the doctine of sovereign immunity to deny student loan borrowers their day in court if they had been wronged by the lender. This will be of great assistance to aggrieved borrowers for many years to come. To get this victory, Wiley Rein had to win three separate appeals in the 4th Circuit and have the decision pass muster at the U.S. Supreme Court. This was an incredible achievement that will help borrowers as the sadly mishandled Public Service Loan Forgiveness progam is sorted out.*
• Getting a lender to a jury trial, where finally the sun shed its light on how the lender viewed its federal regulator, the U.S. Department of Education. "Pathetic" and "weak-minded" was the lender view. The lender even called a decison by Secretary Margaret Spellings, to restate Department regulations governing subsidies, a "joke." To get mountains of such evidence into the public realm was indeed one of the main goals of a jury trial. Wiley Rein did this through painstaking discovery over months and years, even while knowing (all too well, as it turned out) that discovery evidence might not make any difference to a jury, which was confronted by the fact that the Department of Education paid the false claims for years without question.** Pursuing truth through discovery for the sake of sunshine was a courageous and selfless act by Wiley Rein on behalf of its client, deserving of the highest acclaim.
• Bringing to light unseemly practices among certain lenders. One trial witness was confronted with the fact that she had set up a consulting company to show a for-profit lender how it could reap huge additional subsidies from the Department of Education, for a two percent share of the extra take for her company. The lender eventually had to pay back a portion of the false claims involved in the scheme, but the consultant walked away with her percentage nevertheless, with no consequences. Citizens and taxpayers, take note of how your tax dollars are spent.
The list could go on and on, and with appropriate curiosity shown by historians, journalists, public policy experts, and ordinary citizens, it will. The final lawsuit is over; Wiley Rein has done extraordinary, incredibly praiseworthy work.
Now: Is there anything to be learned from the ten years of these legal battles? Let's hope so, and let's get to it.
________________________
* Not that any aggrieved borrower should or should not actually sue. That the possibility of a successful suit exists should have a salutary effect on servicer performance. After Oberg III was decided by the 4th Circuit and the Supreme Court denied a writ of certiorari on the case in January, 2017, all tax-exempt lenders and servicers that relied on sovereign immunity to turn away borrower suits were put on notice that such a defense might henceforth not work.
** Making it difficult if not impossible to demonstrate to a jury that the lender was without a reasonable basis for its claims, because the Department was paying them, even though the Department later ruled the claims false after audits by the Inspector General. A jury, conversely, could have found that the claims were reckless, given that the lender never sought opinion of counsel, never asked the Department for its approval, and in fact hid its false claims scheme from the Department, as shown by Wiley Rein through discovery. But this jury did not.
Washington -- Coming off ten years of lawsuits against student loan lenders in which our overall record is 7-1-1, it's time to give credit where credit is due: mostly to the law firm of Wiley Rein (and, through 2010, the TELG law group). Tens of millions of dollars of repayments of false lender claims have come back to the U.S. Treasury. Students and families themselves now have new opportunities to challenge lenders and servicers for their errors, when often before they had no recourse. And sunshine has broken through to show how the shadowy side of the student loan system really works.
Think of the legal victories:
• Settlements with seven lenders, which not only got many millions back for taxpayers, but sent a strong message that false claims have consequences. False claims can be attempted, but at lenders' peril. The false claims between 2002 and 2006 in these cases obviously played a role in the decision by Congress in 2010 to kill the expensive, bank-based student loan system, FFEL. That freed up savings of over $30 billion for students, over subsequent years, in the form of additional grants, not loans. Think of it, $30 billion for financially needy students!
• A victory at the U.S. Supreme Court level, to confirm a 4th Circuit decision that a tax-exempt lender could not hide behind the doctine of sovereign immunity to deny student loan borrowers their day in court if they had been wronged by the lender. This will be of great assistance to aggrieved borrowers for many years to come. To get this victory, Wiley Rein had to win three separate appeals in the 4th Circuit and have the decision pass muster at the U.S. Supreme Court. This was an incredible achievement that will help borrowers as the sadly mishandled Public Service Loan Forgiveness progam is sorted out.*
• Getting a lender to a jury trial, where finally the sun shed its light on how the lender viewed its federal regulator, the U.S. Department of Education. "Pathetic" and "weak-minded" was the lender view. The lender even called a decison by Secretary Margaret Spellings, to restate Department regulations governing subsidies, a "joke." To get mountains of such evidence into the public realm was indeed one of the main goals of a jury trial. Wiley Rein did this through painstaking discovery over months and years, even while knowing (all too well, as it turned out) that discovery evidence might not make any difference to a jury, which was confronted by the fact that the Department of Education paid the false claims for years without question.** Pursuing truth through discovery for the sake of sunshine was a courageous and selfless act by Wiley Rein on behalf of its client, deserving of the highest acclaim.
• Bringing to light unseemly practices among certain lenders. One trial witness was confronted with the fact that she had set up a consulting company to show a for-profit lender how it could reap huge additional subsidies from the Department of Education, for a two percent share of the extra take for her company. The lender eventually had to pay back a portion of the false claims involved in the scheme, but the consultant walked away with her percentage nevertheless, with no consequences. Citizens and taxpayers, take note of how your tax dollars are spent.
The list could go on and on, and with appropriate curiosity shown by historians, journalists, public policy experts, and ordinary citizens, it will. The final lawsuit is over; Wiley Rein has done extraordinary, incredibly praiseworthy work.
Now: Is there anything to be learned from the ten years of these legal battles? Let's hope so, and let's get to it.
________________________
* Not that any aggrieved borrower should or should not actually sue. That the possibility of a successful suit exists should have a salutary effect on servicer performance. After Oberg III was decided by the 4th Circuit and the Supreme Court denied a writ of certiorari on the case in January, 2017, all tax-exempt lenders and servicers that relied on sovereign immunity to turn away borrower suits were put on notice that such a defense might henceforth not work.
** Making it difficult if not impossible to demonstrate to a jury that the lender was without a reasonable basis for its claims, because the Department was paying them, even though the Department later ruled the claims false after audits by the Inspector General. A jury, conversely, could have found that the claims were reckless, given that the lender never sought opinion of counsel, never asked the Department for its approval, and in fact hid its false claims scheme from the Department, as shown by Wiley Rein through discovery. But this jury did not.
Moving on to More Questions about Student Loans
December, 2017
Washington -- Ten years ago I filed suit in federal court on behalf of the United States to recover taxpayer funds claimed illegally by nine financial institutions, all student loan lenders and servicers. Over the years, this action has resulted in the return of over $70 million of taxpayer money to the U.S. Treasury.
As of 2016, of the nine financial institutions sued, seven have paid money back in settlements. The eighth dropped out of the suit because it was found by the court to be an arm of the state of Arkansas and thus exempt under the doctrine of sovereign immunity. This was no great loss to the suit, as the lender had already paid back several million voluntarily and the remaining issue was whether the lender had actually paid back all it owed.
So with a record of 7-0-1, the last case went to a federal jury trial this November against PHEAA, a Pennsylvania financial institution. PHEAA told the jury that it had thought its billings were legal, because the Department of Education paid them. Evidence presented at the trial also showed that PHEAA considered the Department "pathetic" and "weak-minded," and that a subsequent finding by Secretary Margaret Spellings (who restated regulations making clear the claims has never been legal), was a "joke." The jury could not overcome the fact that the Department had indeed paid the claims.
Which brings us to an overall record of 7-1-1, thanks to a remarkable effort by my counsel in the case, the team of lawyers at Wiley Rein (and, through 2010, the TELG law group). Even getting the PHEAA case to trial required a Wiley Rein victory at the U.S. Supreme Court, which confirmed a 4th Circuit ruling that PHEAA could not use sovereign immunity as a means to avoid a jury trial. This victory allowed a student loan borrower in a companion case, Pele v. PHEAA, to sue and separately settle with PHEAA under the Fair Credit Reporting Act. This had previously been impossible.
The effort to clean up the nation's student loan mess now moves into a new phase, as it must. Total student loan debt outstanding has surpassed $1.4 trillion. Far too many borrowers, victimized by shoddy for-profit schools and predatory lenders, cannot pay their loans back. The student loan mess is ruining the American Dream for countless students and families across the country; they have no way out of it.
Thanks to getting PHEAA to a jury trial, however, the record of evidence in this case can now be examined by the public, including historians, investigative reporters, and those who write law journal articles about civil fraud and the False Claims Act. The fact that the jury was not able to get money back for taxpayers is secondary to the benefit of allowing sunshine onto how our nation's student loan system works, to reveal all its ugliness.
The next phase also must deal with the pending question of who can regulate the student loan lenders and servicers. Several state attorneys general have filed suit on behalf of their citizens against Navient (another large lender and servicer) and PHEAA. The Consumer Financial Protection Bureau has filed suit against Navient as well. The financial institutions are fighting back, as they want desperately to be regulated not by states, but by the Department of Education.
Is there a better way? Many thoughtful people, troubled at the devastation visited on students and their families by the current system (let alone the billions in costs to taxpayers for subsidies to servicers), have suggested that the United States adopt the student loan system used in other countries. Other countries successfully handle student loan repayments through their tax withholding and payment systems, avoiding the Navients and PHEAAs. It's time to take a serious look at this alternative.
Washington -- Ten years ago I filed suit in federal court on behalf of the United States to recover taxpayer funds claimed illegally by nine financial institutions, all student loan lenders and servicers. Over the years, this action has resulted in the return of over $70 million of taxpayer money to the U.S. Treasury.
As of 2016, of the nine financial institutions sued, seven have paid money back in settlements. The eighth dropped out of the suit because it was found by the court to be an arm of the state of Arkansas and thus exempt under the doctrine of sovereign immunity. This was no great loss to the suit, as the lender had already paid back several million voluntarily and the remaining issue was whether the lender had actually paid back all it owed.
So with a record of 7-0-1, the last case went to a federal jury trial this November against PHEAA, a Pennsylvania financial institution. PHEAA told the jury that it had thought its billings were legal, because the Department of Education paid them. Evidence presented at the trial also showed that PHEAA considered the Department "pathetic" and "weak-minded," and that a subsequent finding by Secretary Margaret Spellings (who restated regulations making clear the claims has never been legal), was a "joke." The jury could not overcome the fact that the Department had indeed paid the claims.
Which brings us to an overall record of 7-1-1, thanks to a remarkable effort by my counsel in the case, the team of lawyers at Wiley Rein (and, through 2010, the TELG law group). Even getting the PHEAA case to trial required a Wiley Rein victory at the U.S. Supreme Court, which confirmed a 4th Circuit ruling that PHEAA could not use sovereign immunity as a means to avoid a jury trial. This victory allowed a student loan borrower in a companion case, Pele v. PHEAA, to sue and separately settle with PHEAA under the Fair Credit Reporting Act. This had previously been impossible.
The effort to clean up the nation's student loan mess now moves into a new phase, as it must. Total student loan debt outstanding has surpassed $1.4 trillion. Far too many borrowers, victimized by shoddy for-profit schools and predatory lenders, cannot pay their loans back. The student loan mess is ruining the American Dream for countless students and families across the country; they have no way out of it.
Thanks to getting PHEAA to a jury trial, however, the record of evidence in this case can now be examined by the public, including historians, investigative reporters, and those who write law journal articles about civil fraud and the False Claims Act. The fact that the jury was not able to get money back for taxpayers is secondary to the benefit of allowing sunshine onto how our nation's student loan system works, to reveal all its ugliness.
The next phase also must deal with the pending question of who can regulate the student loan lenders and servicers. Several state attorneys general have filed suit on behalf of their citizens against Navient (another large lender and servicer) and PHEAA. The Consumer Financial Protection Bureau has filed suit against Navient as well. The financial institutions are fighting back, as they want desperately to be regulated not by states, but by the Department of Education.
Is there a better way? Many thoughtful people, troubled at the devastation visited on students and their families by the current system (let alone the billions in costs to taxpayers for subsidies to servicers), have suggested that the United States adopt the student loan system used in other countries. Other countries successfully handle student loan repayments through their tax withholding and payment systems, avoiding the Navients and PHEAAs. It's time to take a serious look at this alternative.
Simply Unfathomable
December, 2017
Berlin -- Germany is trying, so far without success, to put together a coalition government under the leadership of Chancellor Angela Merkel of the Christian Democratic Union (CDU).
The first attempt has foundered. The CDU (along with the Christian Social Union, its Bavarian sister party) offered positions in the government to the Green Party and to the Free Democratic Party (FDP) to form a voting majority in the Bundestag. This somewhat unlikely joining of four parties was given the short-hand name of "Jamaika" coalition, because the colors of the party symbols were black (CSU/CSU), green (the Greens) and yellow (FDP), the colors of the Jamaican flag.
Surprisingly, it was the FDP that blew up the talks. The Greens and the CDU were making solid progress. The pro-business FDP had been aligned with the CDU in previous governments, so why not once again? There is not a lot of daylight between the CDU and the FDP ideologically.
What on earth was the FDP thinking? It had been out of power for years, and had even lost representation in the Bundestag. It campaiged on its reputation for responsible government, but once Chancellor Merkel offered it the chance to act responsibly, it bolted. It was a shock. This, after all, is the party of the late statesman Hans Dietrich Genscher, who was foreign minister in both the governments of Helmut Schmidt (SPD) and Helmut Kohl (CDU), during the 1980s and 1990s.
So it is back to the drawing board to see if the Social Democratic Party (SPD) will once again join the CDU in a grand coalition government. That is the coalition that has governed Germany for the past several years, quite successfully, but it has cost the SPD votes in several elections, as the SPD has not been able to distinguish itself from the CDU on many issues. SPD reluctance to join a coalition is understandable.
Moreover, the SPD wants to act as the main opposition in the Bundestag. If it joins the government, that would leave the far-right Alternativ für Deutschland (AfD) party as the main opposition, giving it recognition and authority far beyond the 13% share of votes it got in the recent national elections.
The CDU talks with the SPD will linger on for some time.
What is the American interest here? Doubtless it is to see Germany led by a stable government. What is the Russian interest here? Doubtless it is to see turmoil and instability in the leading European country that has stood for Western values and democracy. Russia chafes at the effectiveness of the NATO alliance, through which Germany and the United States, for decades, have defended freedom in the Baltic States, in Eastern Europe, and on the Southeastern Europe flank.
Which is why it is troubling to think Russian interests are being coddled by the current U.S. president, and to worry that he was the product of Russian meddling in American elections.
Like the unfathomable and irresponsible leadership of the FDP, what on earth can the U.S. president be thinking? Was fighting the Cold War all for naught?
Berlin -- Germany is trying, so far without success, to put together a coalition government under the leadership of Chancellor Angela Merkel of the Christian Democratic Union (CDU).
The first attempt has foundered. The CDU (along with the Christian Social Union, its Bavarian sister party) offered positions in the government to the Green Party and to the Free Democratic Party (FDP) to form a voting majority in the Bundestag. This somewhat unlikely joining of four parties was given the short-hand name of "Jamaika" coalition, because the colors of the party symbols were black (CSU/CSU), green (the Greens) and yellow (FDP), the colors of the Jamaican flag.
Surprisingly, it was the FDP that blew up the talks. The Greens and the CDU were making solid progress. The pro-business FDP had been aligned with the CDU in previous governments, so why not once again? There is not a lot of daylight between the CDU and the FDP ideologically.
What on earth was the FDP thinking? It had been out of power for years, and had even lost representation in the Bundestag. It campaiged on its reputation for responsible government, but once Chancellor Merkel offered it the chance to act responsibly, it bolted. It was a shock. This, after all, is the party of the late statesman Hans Dietrich Genscher, who was foreign minister in both the governments of Helmut Schmidt (SPD) and Helmut Kohl (CDU), during the 1980s and 1990s.
So it is back to the drawing board to see if the Social Democratic Party (SPD) will once again join the CDU in a grand coalition government. That is the coalition that has governed Germany for the past several years, quite successfully, but it has cost the SPD votes in several elections, as the SPD has not been able to distinguish itself from the CDU on many issues. SPD reluctance to join a coalition is understandable.
Moreover, the SPD wants to act as the main opposition in the Bundestag. If it joins the government, that would leave the far-right Alternativ für Deutschland (AfD) party as the main opposition, giving it recognition and authority far beyond the 13% share of votes it got in the recent national elections.
The CDU talks with the SPD will linger on for some time.
What is the American interest here? Doubtless it is to see Germany led by a stable government. What is the Russian interest here? Doubtless it is to see turmoil and instability in the leading European country that has stood for Western values and democracy. Russia chafes at the effectiveness of the NATO alliance, through which Germany and the United States, for decades, have defended freedom in the Baltic States, in Eastern Europe, and on the Southeastern Europe flank.
Which is why it is troubling to think Russian interests are being coddled by the current U.S. president, and to worry that he was the product of Russian meddling in American elections.
Like the unfathomable and irresponsible leadership of the FDP, what on earth can the U.S. president be thinking? Was fighting the Cold War all for naught?
Bad Days for NU, and for All Nebraska
November, 2017
Lincoln -- These are bad days for the University of Nebraska, for the State of Nebraska, and for all who call Nebraska home.
I am not talking about the football team, nor about the free-speech contretemps on the Lincoln campus. Indeed, those problems are bad enough but they should not be taking up so much of the university president's and chancellor's time, dominating as they do state-wide headlines.
Rather, I am referring to Nebraska's agricultural economy, how deeply it is in trouble, and how the leadership of our land-grant university must become more engaged in finding solutions to the growing ag sector crisis.
Last week I talked to a member of the state's revenue forecasting board, who confirmed the pessimistic news that while Omaha and Lincoln are doing fairly well, the rest of the state is not and state government tax revenues are plummeting. This means no money for local property tax relief, let alone for the funding of state government functions. The board's prediction is that things will only get worse.
As if that weren't enough, the U.S. Chamber of Commerce released its report that Nebraska would be among the states hardest hit by the current NAFTA negotiations. If the Trump Administration pulls the U.S. out of NAFTA, Nebraska will lose $2.6 billion in export revenue and lose 87,000 jobs.
The real free speech question here is whether the university leadership is able to speak forthrightly to this situation and take the institution in directions that might turn the failing ag sector around. That's what land-grant institutions are for. Or has the ascendant political culture in Nebraska, which seems to want to take advantage of the university's troubles, made it unsafe for such speech and leadership because part of the solution is inherently political and would constitute a challenge? Who else has the stature to admit that current farm programs are not working and that withdrawing from NAFTA is daft?*
The university, to be sure, is doing some new and impressive work for Nebraska agriculture. For example, in a few days the Nebraska Innovation Campus will host a session on developing local food markets, along with partners USDA and the Nebraska Investment Finance Authority, among others. The NIC has come a long way from its shaky start and is now starting to live up to its name. New initiatives at the IANR campus are also promising.
But at the top, university leadership is mired in a contrived controversy involving an undergraduate student who, outside the classroom, proclaims "Big Government Sucks" and a graduate student who calls the undergraduate a "Neo-Fascist." To me, both expressions are offensive and best handled by Miss Manners, not by our top university leaders who need to start speaking out themselves on what must be done to save the Nebraska agricultural economy.
____________________________
*Certainly not the faculty, which has just been chilled by the sacrifice of two university employees to appease political critics. Their offense? Fighting back for their institution, perhaps ineptly, but loyally. Message sent; message received.
Lincoln -- These are bad days for the University of Nebraska, for the State of Nebraska, and for all who call Nebraska home.
I am not talking about the football team, nor about the free-speech contretemps on the Lincoln campus. Indeed, those problems are bad enough but they should not be taking up so much of the university president's and chancellor's time, dominating as they do state-wide headlines.
Rather, I am referring to Nebraska's agricultural economy, how deeply it is in trouble, and how the leadership of our land-grant university must become more engaged in finding solutions to the growing ag sector crisis.
Last week I talked to a member of the state's revenue forecasting board, who confirmed the pessimistic news that while Omaha and Lincoln are doing fairly well, the rest of the state is not and state government tax revenues are plummeting. This means no money for local property tax relief, let alone for the funding of state government functions. The board's prediction is that things will only get worse.
As if that weren't enough, the U.S. Chamber of Commerce released its report that Nebraska would be among the states hardest hit by the current NAFTA negotiations. If the Trump Administration pulls the U.S. out of NAFTA, Nebraska will lose $2.6 billion in export revenue and lose 87,000 jobs.
The real free speech question here is whether the university leadership is able to speak forthrightly to this situation and take the institution in directions that might turn the failing ag sector around. That's what land-grant institutions are for. Or has the ascendant political culture in Nebraska, which seems to want to take advantage of the university's troubles, made it unsafe for such speech and leadership because part of the solution is inherently political and would constitute a challenge? Who else has the stature to admit that current farm programs are not working and that withdrawing from NAFTA is daft?*
The university, to be sure, is doing some new and impressive work for Nebraska agriculture. For example, in a few days the Nebraska Innovation Campus will host a session on developing local food markets, along with partners USDA and the Nebraska Investment Finance Authority, among others. The NIC has come a long way from its shaky start and is now starting to live up to its name. New initiatives at the IANR campus are also promising.
But at the top, university leadership is mired in a contrived controversy involving an undergraduate student who, outside the classroom, proclaims "Big Government Sucks" and a graduate student who calls the undergraduate a "Neo-Fascist." To me, both expressions are offensive and best handled by Miss Manners, not by our top university leaders who need to start speaking out themselves on what must be done to save the Nebraska agricultural economy.
____________________________
*Certainly not the faculty, which has just been chilled by the sacrifice of two university employees to appease political critics. Their offense? Fighting back for their institution, perhaps ineptly, but loyally. Message sent; message received.
Veterans' Day, 2017
November, 2017
Washington -- Today is Veterans' Day and a time to reflect on family and friends who served in uniform.
Thoughts go first to those veterans I knew personally, albeit as a youngster with little appreciation for their service. Great uncles Ralph Zicafoose, Oscar Spader, and Herbert Bergstrom were all wounded in WWI. Hilmer Bergstrom served in the merchant marine.
Then there are my first cousins, once removed, who served in WWII: Walt Johnson; George Richardson; Les and Orville Oberg; and John Calvin Oberg, who survived the sinking of the USS Wasp.
Four first cousins served during the period from WWII's end through Korea and Vietnam: Roger and Merv Johnson, Virgil Oberg, Byron Almquist.
Many friends and neighbors have served in uniform. I hardly knew him, but neighbor Frank Eager (1872-1960) served in the Philippine War and was awarded the Silver Star. (His family homestead was rented out and he lived in Lincoln.) Several in my high school class served (as did I). Some in my college class were killed or captured in Vietnam.
Going back further, family ancestors on my paternal grandmother's side served in the colonial wars and in the Revolutionary War. Some of their descendants, also forebears, fought on both sides of the Civil War, as their ancestral home was in Virginia at the beginning of the war and in West Virginia at the end of it. Ephraim Zicafoose, who fought for the Union, lies buried in a Union cemetery in Mississippi. His cousin Sampson Zicafoose, my great-great grandfather, died in 1863 of unknown causes after being in the Confederate Army. Likely he was conscripted into it, and may even have perished through fleeing it, as he made it home before his death; but he may also have been a willing defender of slavery, as his wife's family (Simmons) had been slaveholders.
Which leads to the question of what to make of the current controversy over Confederate monuments. Being the descendant of at least one Confederate soldier, I have license equal to other such descendants to voice my opinion, which is to put them in museums, where they will be explained, not celebrated. We are not a country that defaces or blows-up statues. We should confront our history honestly and try to improve from it.
Recognition of uniformed service, in whatever wars, should be a time of reflection more than celebration. Indeed, I'm grateful for all who served in honorable causes. As to my own service, I'd like to think it was in an honorable cause (and some of it was, to be sure; see a previous post), but I'm not putting on my old uniform and joining any parades this Veterans' Day. I could, but won't.
Washington -- Today is Veterans' Day and a time to reflect on family and friends who served in uniform.
Thoughts go first to those veterans I knew personally, albeit as a youngster with little appreciation for their service. Great uncles Ralph Zicafoose, Oscar Spader, and Herbert Bergstrom were all wounded in WWI. Hilmer Bergstrom served in the merchant marine.
Then there are my first cousins, once removed, who served in WWII: Walt Johnson; George Richardson; Les and Orville Oberg; and John Calvin Oberg, who survived the sinking of the USS Wasp.
Four first cousins served during the period from WWII's end through Korea and Vietnam: Roger and Merv Johnson, Virgil Oberg, Byron Almquist.
Many friends and neighbors have served in uniform. I hardly knew him, but neighbor Frank Eager (1872-1960) served in the Philippine War and was awarded the Silver Star. (His family homestead was rented out and he lived in Lincoln.) Several in my high school class served (as did I). Some in my college class were killed or captured in Vietnam.
Going back further, family ancestors on my paternal grandmother's side served in the colonial wars and in the Revolutionary War. Some of their descendants, also forebears, fought on both sides of the Civil War, as their ancestral home was in Virginia at the beginning of the war and in West Virginia at the end of it. Ephraim Zicafoose, who fought for the Union, lies buried in a Union cemetery in Mississippi. His cousin Sampson Zicafoose, my great-great grandfather, died in 1863 of unknown causes after being in the Confederate Army. Likely he was conscripted into it, and may even have perished through fleeing it, as he made it home before his death; but he may also have been a willing defender of slavery, as his wife's family (Simmons) had been slaveholders.
Which leads to the question of what to make of the current controversy over Confederate monuments. Being the descendant of at least one Confederate soldier, I have license equal to other such descendants to voice my opinion, which is to put them in museums, where they will be explained, not celebrated. We are not a country that defaces or blows-up statues. We should confront our history honestly and try to improve from it.
Recognition of uniformed service, in whatever wars, should be a time of reflection more than celebration. Indeed, I'm grateful for all who served in honorable causes. As to my own service, I'd like to think it was in an honorable cause (and some of it was, to be sure; see a previous post), but I'm not putting on my old uniform and joining any parades this Veterans' Day. I could, but won't.
Stan Matzke, Jr. 1933 - 2017
November, 2017
Lincoln and Washington -- It's painful to note the passing yesterday of Stan Matzke, Jr., my longtime friend and colleague.
The last time I heard from him was in the mail. He sent me a photo he had taken while visiting our Nebraska prairie property, along with two dollar bills to pay for the shoe covers he had accidently taken from our barn. The gesture was in part to tweak the very idea of having shoe covers in a barn. Stan had his own farm in the southern reaches of Lancaster County, on which he and Dorothy raised pecans and walnuts.
Stan sometimes thought of himself modestly, as being in the shadow of his father, Stan Matzke, Sr., a legendary state senator and conservationist. He always liked it when I told him I knew the Matzke name more from his own exploits on the basketball court (as a star player at NU in the 1950s) than from the accomplishments of his father.
Stan Jr. had his own accomplishments in government, about which I have written before. See posts here and here. He could work across party lines easily for good causes, working with Democrats while remaining close to the most decent of Republicans.
Stan, I'll be tied up in Washington next week and won't have a chance to pay my final respests to you in Lincoln. So I'll just have to post this message to say Nebraska has lost one of its best, and forever will be a lesser place without you.
Lincoln and Washington -- It's painful to note the passing yesterday of Stan Matzke, Jr., my longtime friend and colleague.
The last time I heard from him was in the mail. He sent me a photo he had taken while visiting our Nebraska prairie property, along with two dollar bills to pay for the shoe covers he had accidently taken from our barn. The gesture was in part to tweak the very idea of having shoe covers in a barn. Stan had his own farm in the southern reaches of Lancaster County, on which he and Dorothy raised pecans and walnuts.
Stan sometimes thought of himself modestly, as being in the shadow of his father, Stan Matzke, Sr., a legendary state senator and conservationist. He always liked it when I told him I knew the Matzke name more from his own exploits on the basketball court (as a star player at NU in the 1950s) than from the accomplishments of his father.
Stan Jr. had his own accomplishments in government, about which I have written before. See posts here and here. He could work across party lines easily for good causes, working with Democrats while remaining close to the most decent of Republicans.
Stan, I'll be tied up in Washington next week and won't have a chance to pay my final respests to you in Lincoln. So I'll just have to post this message to say Nebraska has lost one of its best, and forever will be a lesser place without you.
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