Student Loan Charity Under Fire

(CBS)  For 20 years, Catherine Reynolds has guided the non-profit student loan charity Educap as it's lent billions of dollars to hundreds of thousands of college students.

Reynolds has become a leading philanthropist, donating money made from those charity loans to many worthy causes.

But now, CBS News Investigative Correspondent Sharyl Attkisson reports, the IRS and Congressional investigators are probing allegations of a darker side to Reynolds' student loan charity - where family and friends benefit from the charity dime, and executives enjoy big salaries and perks such as private jet travel and lavish retreats.

While Reynolds donated profits from Educap loans to other charities in 2007, it turns out the biggest grant by far - one for $8 million - went to the Academy of Achievement, which happens to be run by her husband Wayne. He then paid himself and a company he owns $1.5 million, according to tax records. Investigators are trying to unravel the complex ties between the husband-and-wife charities, which are so intertwined that the self-dealing and relationship disclosures span eight pages of tax filings.

Catherine Reynolds has gotten millions for running Educap - $1.2 million in 2007 alone. She and the other well-paid Educap executives enjoy fringe benefits such as bodyguards and meetings at swank resorts.

On one charity trip to Europe, IRS documents allege Reynolds spent $8,150 in Educap money on lavish gifts for friends, such as a cashmere cape.

Watchdog Stephen Burd says all the money going out Educap's door should be put back into the charity to make student loans more affordable. After all, that's the whole point. Instead, he says Educap has some of the toughest loan terms around.

"These are absolutely not charitable terms," said Burd, of the New America Foundation.

Burd says Educap charges up to 18 percent interest - triple the government rates and as much or more than for-profit companies. He's heard from dozens student borrowers who complain about costs and aggressive collection tactics, who advise to avoid this company because it is predatory lending.

Catherine Reynolds wouldn't agree to an interview, but has said in the past that any financial benefit to her family was legal and in accordance with normal business procedures, and that EduCap loans are comparable to private industry loans.

To get an idea of what else investigators are looking into on needs to look no further than Educap's $30 million private jet and the well-connected politicians who flew on it. Click here to read more exclusive details in Part Two of this report.

[mjnemelka]

buzz5054, Are you aware the Department of Education has a student loan ombudsman office which may be able to assist you with this matter? If you were not aware of this, go to www.ed.gov and follow the links to the Department's Ombudsman - they may be able to help. I work in the student loan industry and have helped resolve problems exactly like yours. Feel free to email me at [e-mail] if you'd like. Thxs and good luck!

[2009mom]

In the world of private student loans, everyone should be an aware consumer. The article seems to compare the rates of private loans to that of federal loans, which are completely different.
Student loans have no bearing on the cost of tuition. The schools continue to increase it to cater to the spoiled youth of this time.
Apparently we are all supposed to live in the middle class and not seek more. A company that finds success, especially without bailout money may be on to something.

[rmonroe401]

We know from tax records, Dems are far less charitible with their own money and a lot more chairitable with other people's money.

Posted by platteman

___________________________

We also know that Republicans give more because they are so brainwashed by the so-called Christian Right. Evangelicals and their ilk are all out for cash, not souls for Christ. They collect every dime they can - all with the promise of eternal life with God. What they actually deliver is lessons of hatred, judgement, and evil. THAT is why Republicans give so much more... they are sheeple!


AMEN TO THAT

[mrsdi]

How is this company claiming to be a charity? This is bizarre.

[cheetah-man7]

We know from tax records, Dems are far less charitible with their own money and a lot more chairitable with other people's money.

Posted by platteman

___________________________

We also know that Republicans give more because they are so brainwashed by the so-called Christian Right. Evangelicals and their ilk are all out for cash, not souls for Christ. They collect every dime they can - all with the promise of eternal life with God. What they actually deliver is lessons of hatred, judgement, and evil. THAT is why Republicans give so much more... they are sheeple!

[tbuckl]

Again I am not suprized at Corp. America stealing everything they can get their hands on. This is the way our leaders in this nation have lead. They are our real criminals and they the backing of the Courts and the powers to be. The elite of this country are our own homegrown terrorist who have come home to roost and pray upon the Citizens and their dreams of a meaningful future. They have set fire to our Roman Empire and turned the American Dream into a nightmare in which we can not wake up from.

[john_in_nc-2009]

Catherine Reynolds needs to go to prison.

[babooph]

The rich are so noble -with their charities-look at all the jobs for the peons from her-car wash guys -lawn men,maids,bodyguards-all with great educations they are paying her interest on!

[platteman]

We know from tax records, Dems are far less charitible with their own money and a lot more chairitable with other people's money. Unlike the Reps which is the other way around. Look at Don't mess with Joe Biden, Chris Dodd, Barney, the frank footer. Even Obambi gave very little to charity, yet wants to give all our money away. Where do I get a job like that, taking other people's money for my use like Madoff, Schumer, Rangle et all.

[u-r-right]

It goes deeper than this. Look into what perks and priviliges the top brass at each college and university get in their careers. No wonder tuition is so high and going higher. It's all about greed across the whole spectrum.