Opinion: The New Student Loan Czar?

The Obama administration, with help from Democrats in the House and Senate, has not only managed to pass a massive health care bill into law but also brand new student loan regulations. The goal is to eliminate private banking institutions from the business of servicing student loans and put the federal government in charge.

The administration has yet to appoint a student loan czar. This individual would oversee the program of mandatory public service in return for college money, but could Undersecretary of Education Robert Shireman be at the top of the administration’s list of choices?

By the appointment of Robert Shireman as the Deputy Undersecretary of Education, President Obama appears to have broken a campaign promise to keep lobbyists out of his administration (see video above). Mr. Shireman, founder and former President of The Institute for College Access and Success (TICAS), was a “Registered Lobbying Client” (as defined by Section 3 of the Lobbying Disclosure Act of 1995).

Mr. Shireman became a consultant to the Obama transition team on February 3, 2009 and later became a political appointee at the Department of Education in April. It appears his previous involvement as a lobbyist for TICAS shows he is establishing the very policies at the Department of Education he advocated for when he previously headed up TICAS. In fact, one day after he became a full time consultant with the Education Department, he did a round table discussion with TICAS policy analyst Matthew Reed.

On January 22, 2009 The New York Times reported:

In what ethics-in-government advocates described as a particularly far-reaching move, Mr. Obama barred officials of his administration from lobbying their former colleagues "for as long as I am president." He barred former lobbyists from working for agencies they had lobbied within the past two years and required them to recuse themselves from issues they had handled during that time.

As Deputy Under Secretary, Mr. Shireman testified in May of 2009 before the House Education and Labor Committee. He spoke to members about securing Pell Grants beyond the Recovery Act as well as offer further access to federal student loans:

Putting the Pell Grant program on a strong and predictable financial footing does take considerable resources. Fortunately, our plans for the student loan programs generate significant budget savings. This is accomplished by originating all new loans under the Direct Loan program beginning with the 2010-2011 academic year. Reliable access to student loans is important not just for our students and their families, but also for our entire economy. We have seen the guaranteed Federal student loan system, known as the Federal Family Education Loan (FFEL) Program, come close to collapse this past year. Repeated interventions by the Congress and the Department were required to ensure that every student and parent who needed a Federal student loan received one. While I am pleased to report that these efforts were successful, I am less than pleased to report that the Department will have to replicate this year’s efforts—and then some—to ensure continued FFEL availability for all for the 2009-10 academic year. This repair is only temporary, and Congress will need to decide the future of the Federal student loan system.

As President of TICAS in 2007, Mr. Shireman testified before the Iowa Legislature Joint Government Oversight Committee where he advocated for instituting federal lending of college loans over using private lending institutions. In the testimony Mr. Shireman stated (pgs. 4 – 5):

The best private student loan is no private student loan

Nationally, only about one in every 20 undergraduate students took out a private student loan in 2003-4.But available loan volume data (which include both graduate and undergraduate borrowing) suggest rapid growth: 12 percent last year, and an average of 27 percent in each of the prior five years.

Mr. Shireman also stated (pg. 6):

Similarly, we need to put up a “stop sign” of sorts and create a giant pause for students who are entering private loan territory. And we need an even bigger stop sign for college officials who might otherwise recommend that a student take out a private loan. Too often students think, “I’m already taking out a Sallie Mae Stafford Loan, so what’s the big deal if I also have a Sallie Mae Signature Loan?” The huge difference in terms and risks is easily masked by this kind of branding and by a school’s apparent endorsement. Responsible financial aid advisors will help them identify better options.

The new student loan provision enacted into law recently, after being slipped into the health care bill’s reconciliation package, has mandated that all student loan servicing be redirected from any private lender to the federal government. Mr. Shireman advocated for TICAS that students should have their loans completely forgiven if they work in public service for ten years.
According to an excerpt in the Obama Transition Project Ethics Code:

I will disqualify myself from involvement in any particular Obama Transition Project matter which to my knowledge may directly conflict with a financial interest of an immediate family member, partner, client, or other individual or organization with which I have had a business relationship within the past 12 months.

Mr. Shireman was appointed to his Department position in April of 2009, and Lauren Asher became president of TICAS in June of that year. Additionally, the Obama administration’s ethics pledge for all executive branch political appointees says:

Revolving Door Ban: All Appointees Entering Government. I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.

These promises were made to deter special interest groups from writing their own laws and policies. Apparently, Mr. Shireman’s appointment to the Obama transition team and, later, to the Department of Education directly violated this campaign pledge.


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