NEWS SCOOP: Sallie Mae Spending Spree to Buy Political Influence

You can do a lot of things with $108,000 send close to 50 students to community college for a year, fund 50 Pell Grants or donate 6,033 copies of the forthcoming Harry Potter book to your local school to name just a few. But Sallie Mae is hoping $108,000 can buy it the hearts and minds of 36 key Democratic lawmakers.

As Higher Ed Watch reported yesterday, and the New York Times follows up today, the loan giant's top strategic goal this year has been to woo Democrats. According to an internal strategy document, immediately after the November 2006 election, Sallie Mae planned to start showering Democrats with campaign contributions particularly fiscally-conservative Democrats known as Blue Dogs and Members of the Congressional Black and Hispanic Caucuses.

An investigation by Higher Ed Watch reveals that Sallie Mae has been living up to its word. Since the last election, Sallie Mae's Political Action Committee (PAC) has made donations worth $108,000 to members of those three groups with the hope that they would oppose efforts by the party's leadership to make deep cuts in federal subsidies private lenders receive to make government-backed loans.

The student loan provider has been especially keen on targeting Blue Dogs a group of 47 moderate to conservative Democratic Congressmen. Since Dec. 4 of last year, Sallie Mae has given $73,500 to 21 different Blue Dogs, including $5,000 to the groups PAC. Thats an average of around $3,500 per candidate. The largest beneficiaries were Indiana Reps. Joe Donnelly and Brad Ellsworth, who each received $7,000, while Reps. Baron Hill of Indiana and Patrick Murphy of Pennsylvania both collected $6,000 (These donations went over the legal limit of $5,000 per candidate per election because $5,000 of that money was given on Dec. 4, which is counted as part of the 2005-06 election cycle).

One notable recipient is Rep. Lincoln Davis of Tennessee, a Member of the House Subcommittee on Financial Institutions and Consumer Credit, who received two payments totaling $4,000 from Sallie Mae. The latest came on May 4, just a couple of weeks after Davis wrote a letter to Nancy Pelosi (D-CA), the Speaker of the House complaining about proposed cuts to lender subsidy. Mr. Davis also received $10,000 from the companys PAC in the months before the 2006 election.

The company especially tried to entice blue pups, or newly elected Blue Dog Members. In addition to Mr. Donnelly and Mr. Ellsworth, Reps. Kirsten Gillibrand of New York and Tim Mahoney of Florida all received donations of $5,000 on Dec. 4. That's quite a House-warming gift.

Sallie Mae also spread its wealth around to Members of the Congressional Black Caucus. The company made $25,000 worth of contributions to 12 of the 43 CBC members an average of just over $2,000 per elected official. The clear winner among that group is Rep. Robert Scott (VA), who received $5,000 in April. Mr. Scott, a member of the House subcommittee in charge of higher-education policy, had received $7,000 from the company's PAC during the previous election cycle.

Members of the Congressional Hispanic Caucus didn't make out as well as only three of its Members received donations. In combination with a $5,000 gift to the organizations PAC, the groups' members received a total of $9,500. Some of the money was well-targeted, though Sallie Mae gave $2,500 to Rubn Hinojosa of Texas, the Chairman of the House subcommittee in charge of higher-education policy.

Overall, Sallie Mae clearly made an effort to recruit new Democratic allies six of the Blue Dogs and five of the CBC Members had served multiple terms without receiving donations from the loan provider in the previous election cycle.

But Sallie Mae's largesse should not come as a surprise. This is a company that is constantly trying to buy its way out of trouble. We would hope, however, that with the House taking up legislation today to bring much needed reform to the government's student-loan programs, members who received these donations will not let the money cloud their better judgment. And then perhaps, Sallie Mae will realize that its money could have been spent better elsewhere.