Nebraska Attorney General Attacks Andrew Cuomo

Nebraska Attorney General Jon Bruning (R-NE) attacked New York State Attorney General Andrew Cuomos (D-NY) student loan investigation yesterday, saying it's "widely perceived as an embarrassment" and that student loan giant Nelnet is an "ethical, decent, and honest company."

The Nebraska Attorney General goes on to say, "I will never apologize for being a defender of Nelnet." Wait a minute. Isnt the Nebraska Attorney General supposed to be the chief prosecutor for the state?

Professional Responsibility

It's Attorney General Bruning's job to defend the State of Nebraska, not Nelnet, and to prosecute wrongdoing in the state. Bruning must have believed that Nelnet engaged in wrongdoing with respect to the companys student loan marketing practices, because his office fined the company $1 million for those practices. If Bruning considers himself "a defender of Nelnet" and the Nebraska Attorney General office's investigation of Nelnet went to court, was Bruning planning on representing both sides at trial?

Stranger is the statement of Brunings spokeswoman that the Nebraska Attorney General has decided to forgive Nelnet its $1 million fine and contribution to a state student financial aid education fund, because "it doesnt make sense to create two funds for the same purpose."

New York State Attorney General Andrew Cuomo also has a fund. Cuomo settled his investigation with Nelnet last week in exchange for a $2 million contribution to the financial aid education fund his office is running. We guess the Nebraska Attorney General spokeswomans statement means that Bruning thinks Nebraska student loan borrowers are going to be educated by New York State Attorney General Andrew Cuomo.

Even if that were true, the two fund argument still doesnt make sense. When Bruning cut his million dollar deal with Nelnet back on April 20th, New York already had a financial aid education fund set up as per Cuomos earlier settlements with student loan giants Citibank, Sallie Mae, and Education Finance Partners as well as a series of implicated colleges. Did it just take Bruning this long just to figure out that New York had a fund? Did campaign contributions from Nelnet executives have anything to do with his recent discovery?

An Ethical Company

Bruning appears to be more concerned with protecting Nelnet's image and reputation than Nebraska students and their parents, never mind regular taxpayers. In so doing, he has attempted to rewrite history. He claims that Nebraska-based Nelnet didn't violate the law when it overcharged the federal government hundreds of millions of dollars for subsidy payments on loans that the company held. But Bruning is wrong.

In September 2006, the Education Department's Inspector General ruled that Nelnet had violated the law when it claimed 9.5 percent subsidy payments on loans that were not eligible for them. In February 2007, Education Secretary Margaret Spellings concurred with the IG's opinion, and ordered the agency to stop paying these claims. She did, however, make a controversial decision -- one with which we at Higher Ed Watch did not agree -- to let Nelnet keep over billed subsidy payments of about $300 million that the company already had received.

In other words, Secretary Spellings agreed with the Inspector General that Nelnet had acted illegally. Although she forgave the company the illegal claims it already had made, she did not overrule the Inspector General's findings of illegality.

It's Nelnet and now Bruning that should be embarrased. Cuomo's investigation has helped expose widespread abuses in the federal and private student loan programs that U.S Education Department and other government officials have long ignored. Thanks in part to the energy generated by Cuomo's investigation plus we'd like to think our own investigation (credited by others, but not Mr. Cuomo), Congress is cracking down on some of the most egregious student loan industry practices that have left financially needy students vulnerable to predatory lenders. Unlike Bruning, the majority of state attorney generals have joined Cuomo in urging lawmakers to enact rigorous safeguards to protect students and their families from deceptive student loan industry practices.

This whole Nelnet Bruning relationship looks pretty fishy. Is Bruning interested in carrying out his duties as Nebraskas Attorney General, running for higher office, or moving into private practice where he can defend Nelnet as a paying client?