The new student loan czar?

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By appointing Robert Shireman as deputy undersecretary of education, President Obama appears to have broken a campaign promise to keep lobbyists out of his administration.

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).

The Obama administration, with help from Democrats in the House and Senate, has managed not only to pass a massive health care bill into law but also to 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 (a position not created yet by the administration), but could Mr. Shireman be at the top of the administration’s list of choices should the position be established?

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 he hired lobbyists for TICAS advocacy and is establishing at Education the very policies for which he pushed when he headed up TICAS. In fact, one day after he became a full-time consultant, he conducted 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 undersecretary, Mr. Shireman testified in May 2009 before the House Education and Labor Committee about securing Pell Grants beyond the Recovery Act as well as offering further access to federal student loans (emphasis is mine):

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’s Joint Government Oversight Committee to advocate for instituting federal lending of college loans over using private lending institutions. In the testimony Mr. Shireman stated (on pages 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 (on page 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. While Mr. Shireman was critical of the Federal Loan Forgiveness Program, he also said:

“Anyone hoping to take advantage of the loan forgiveness program should make sure to consolidate loans with the federal government’s new Income-based Repayment option, Shireman said. That way, low-paid public service workers will have to pay only a reasonable portion of their salary toward their loans, which could be lower than the regular loan payment.”

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 Education position last April , and Lauren Asher became president of TICAS in June.   Additionally, the Obama administration’s ethics pledge for all executive branch political appointees says (emphasis mine):

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. Shiremans appointment to the Obama transition team and, later, to the Department of Education directly violated this campaign pledge. 

*UPDATE NOTE: This piece specifically said Mr. Shireman was a lobbying client. Three paragraphs down it later said he was a “lobbyist.” However, Mr. Shireman was a lobbying client as originally established at the beginning of the piece not a lobbyist for TICAS. Further clarification was added on Mr. Shireman’s position on the federal loan forgiveness programs.

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About the Author
Kerry Picket

Kerry Picket

Kerry Picket, a former Opinion Blogger/Editor of The Watercooler, was associate producer for the Media Research Center, a content producer for Robin Quivers of "The Howard Stern Show" on Sirius satellite radio and a production assistant and copy writer at MTV.

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