Student Loan Charity Under Fire

CBS Evening News: Is One Educational Charity Abusing Their Status With Lavish Travel And Huge Salaries?

(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.

[platteman]

Never said if she was a Democrat or Republican, but i guess the former, not the later.

[Phxfire]

Former CIA Executive Director 'Dusty' F oggo's name was censored. I find that very funny.

[Phxfire]

Wow, former CIA executive director Kyle "Dusty" F oggo's name was censored by CBS. Now that's funny.

[Phxfire]

People really should be very careful when they start throwing the names of corrupt politicians around as a way to make their 'people' look better. All kinds of glass breaks.

Paschall, Miller, *****, Abdul Tawala Ibn Ali Alishtari, Domenici, Libby, North, Griles, Stockman, Vellanweth, John Doolittle, Renzi, Feeney, Martinez, Bruce Weyhrauch and Pete Kott, McHenry, Gibbons, Tate, Ravenel, Stevens, Boehner, Fabian, Cappelli. These are a very small list of corrupt GOP politicians and backders.

[republic1776]

She's giving more to America than Wall Street and Banks!
She's keeping less than 20 percent.
Wall Street raped us, now we the tax payer pay them to do so with the "Bailouts!
IRS needs to get money from sombody!

[rhs648]

There's probably only a handful of companies / organizations in the entire country--even charitable organizations--where the executives don't think it's their right for reaching "the top" position to have huge salaries and benefits.

It's one of the main problems with the country....
Posted by anon00-2009

You are right but this group doesn't seem very charitable. It is rare that a person can create a successful enterprise and should be rewarded for success. However, this sounds too much like a scam to be a charity.

[zabarc]

Well endeaver-2009 your comment just proves what an idiot you are. Try doing a little research before posting. Ninety percent of people making a living off of getting donated money with the purpose of handing it out are dems....and themselves. You guys are so moral and I look forward to you (re)teaching the rest of us how to live with the same virtues.

...oh yeah, She and he husband made a lot more donations to other dems beside the ones below. Get it? Support corruption and you get $$$.

Catherine B Reynolds
Donation of $28,500 to Democratic Senatorial Campaign
Committee
Catherine B Reynolds
Ceo
Educap, Inc.
Updated
Q2/2007

$28,500

Mc Lean VA
Donation to Democratic Senatorial Campaign Committee

[zabarc]

Well endeaver-2009 your comment just proves what an idiot you are. Try doing a little research before posting. Ninety percent of people making a living off of getting donated money with the purpose of handing it out are dems....and themselves. You guys are so moral and I look forward to you (re)teaching the rest of us how to live with the same virtues.

...oh yeah, She and he husband made a lot more donations to other dems beside the ones below. Get it? Support corruption and you get $$$.

Catherine B Reynolds
Donation of $28,500 to Democratic Senatorial Campaign
Committee
Catherine B Reynolds
Ceo
Educap, Inc.
Updated
Q2/2007

$28,500

Mc Lean VA
Donation to Democratic Senatorial Campaign Committee

[buzz5054]

I wonder if Educap is affiliated with Sallie Mae,another student loan program.The goverment should start investigating the student loan programs.I applied for a student loan in 1978 and cancelled it 1 week later signing all the papers stating Iwas Cancelling the loan,20 years later the Department of ED they informed me I owe them 2500.00$ for the loan that I cancelled I have been fighting this ever since.Pioneer Credit Recovery the collection agency that The Department of ED uses to collect student loans has started garnishing my disability check.Something needs to be done about the student loan programs they have ruined many lives,and considering the economy it will get worse

[rmlorange]

I feel that my daughter and I fell victum to this organization. She was applying for a student loan through, what she thought was, the local college. She got the loan for $6000.00 and they set up the payments to cover the interest only so after three years, she still owes the same amount.