Roundup: Coverage of the Nelnet Settlement

Lets do a quick news roundup of the higher education story of the weekend: the Nelnet settlement.

As expected, the Department of Education is portraying Secretary Spellings decision to suspend future subsidy payments as a defeat for Nelnet. The Departments spin: 1) its a victory for taxpayers because Nelnet is going to lose more than $800 million in subsidies, and 2) its a victory for students because the agreement will set no retroactive recovery precedent that could put small lenders out of business. Never mind the $278 million Nelnet already billed to the government. Students could lose lender options and borrower benefits, and that would be worse.

Reporters are offering a different, much more critical take. The meat of each news story includes several essential elements: Under Secretary of Education Sara Martinez Tucker recapping the Departments spin; Senator Edward M. Kennedy (D-MA) passionately criticizing the decision; Nelnet reiterating its claim that it did nothing wrong; and Representative George Miller promising that the House Committee on Education and Labor will review the settlement. (Disclosure: Higher Ed Watch staff used to work for Kennedy)

Whats interesting is the additions to and deviations from this main storyline. Most of the reporters led with the negative: the Department allowing Nelnet to keep $278 million. The Associated Press was the only outlet to first reference the positive outcome that future payments will be suspended. Each story mentioned the political backdrop, but some in more unfavorable detail than others. Both the New York Times and the Chronicle of Higher Education noted that Nelnet has been a major donor to the Republican party, a fact that Higher Ed Watch first reported.

Here are some significant tidbits that you may have missed:

-Nelnets decision to hire a prominent D.C. law firm, Akin Gump, to lobby on its behalf after the Inspector Generals audit was released (from the Chronicle of Higher Education).

-The Under Secretarys statement that the Department "agreed to disagree" with Nelnetin other words, the Department agrees in principle with the Inspector General, but didnt enforce those principles in the settlement (from Inside Higher Education).

-The human interest narrative within what could be a boring government audit story. The Omaha World-Herald quoted Jon Oberg, the mild-mannered civil servant whistleblower who originally brought Nelnets recycling of 9.5 percent loans to the Departments attention.

-The timing of the announcementthe Department arranged a conference call at 4:30 P.M. on a Friday in the hope that it would "get buried in the quieter weekend news cycle" (from Inside Higher Education), and wouldnt affect Nelnets stock price (from the Omaha World Herald, which noted that the announcement didnt come until "after trading on the New York Stock Exchange ended").

And last but not least, Nelnet reminding us all that "they [do] not expect the prospective loss of the 9.5 percent payments to have a material adverse affect on the companys operations," according to the Omaha World-Herald.

Good thing, otherwise people might have felt bad for them.