Loan Charity's High-Flying Guests Exposed

(CBS)  Educap is a multibillion-dollar student loan charity run by CEO Catherine Reynolds. As CBS News Investigative Correspondent Sharyl Attkisson reported Monday night, Educap is under investigation by the IRS and Congress for alleged abuse of its tax-exempt status because it charges high interest on charitable student loans, and provides lavish perks with millions in compensation for Reynolds and her husband.

CBS News has obtained exclusive details of what may have been the biggest charity perk: use of Educap's $31 million luxury jet, which costs thousands of dollars an hour to operate.

Investigators say for five years, Reynolds jetted friends, family and luminaries to faraway and exotic destinations that sometimes had little to do with the charity's mission.

CBS News has learned that high-profile names on the Educap flight list include CIA Director Leon Panetta, former Sens. Tom Daschle and Ted Stevens, former FBI Director William Sessions and Chicago Mayor Richard Daley.

According to flight records, Panetta and Daschle, while not in public office, accompanied Educap's Catherine Reynolds on flights to private business meetings not related to the charity.

Reynolds also took Daschle and his wife on a tour with seven stops in Europe and the Middle East.

Ted Stevens, his wife and daughter were along on dozens of flights, hitting destinations like Vail and Aspen, Colo., before the senator was convicted on corruption charges last fall.

And records show Reynolds took Chicago's Daley and his wife on 58 flights including ones to Turkey, Asia and Sweden.

Watchdog Stephen Burd says money spent on the jet comes off the backs of students, who have Educap loans costing up to three times more than government loans.

Attkisson asked Burd if he thought Educap was acting like a for-profit company operating as a charity.

"Exactly," said Burd, of the New America Foundation. "Educap is the worst case that I've seen of a charity - a so-called charity - abusing its tax-exempt status."

Reynolds wouldn't talk with CBS News. Educap has said its loans are competitive with private companies. As for the jet, Educap has said its use was appropriate. None of the passengers would talk with us, but there's no law against flying on charity jets. Panetta has told Congress he "acted in full compliance with tax laws."

EduCap sold its pricey jet after the IRS began looking into it. But that hasn't ended the controversy - or the investigations.

[Nettbeast]

I worked for this woman - I can only hope that her long reign of terror is over....

And I'm surprised they haven't really turned up anything new, like the way she used/abused her employees as badly or worse than the way she used/abused the people she purported to be "helping" in the form of overpriced student loans.

Yes, before anyone says anything, I do harbor a grudge, it was 18 months of my life WASTED on something that was marketed as such a good deed.

[edtechlab]

Hope there is follow through on this! Chicago needs a good cleaning out!!!

[kelli_k]

I don't understand why Congresswoman Pelosi doesn't just give all her friends rides on her own private jet. She is one of the wealthiest members of an obscenely wealthy legislature.

Why is it that the biggest liberals are not only stinking rich themselves, but also a wee bit selfish. Remember, paying your taxes is a privilege as well as a patriotic duty. So is sharing the family jet.

Share the love Nancy! Set an example Washington can believe in!

[znamef]

All part of the Bizarro world we live in...

[quickly101]

I hope Congress will move quickly (no pun intended) to strip this company of its tax exempt status. Their actions are shameful and in very poor taste. It wouldn't be a stretch for the government to determine if any laws were broken by this company either. This country is floating on a sea of corruption, what a pitiful mess we find ourselves in. Greed and arrogance drive this company like they do so many in our society.

[longtree-2009]

that is so funny. panetta is now in charge of the CIA. daschle was evading taxes as was timothy geithner the now secretary of the treasury. congress, justice system, the IRS are all powerless these days. criminality anywhere and everywhere in the USA.

[antoniof123]

I know that many people are getting fed up with the rich and this is just a repeat of history. The French, the Russians, the Viet Namisee and the list goes on and on.

The one thing they all have in common is the ending.

Why don't people see this I just don't get it.

[happyass3]

Did anyone expect anything less?? Seems par for the course. So students have to pay high interest rates, that is part of the Obamaeconomics. You ain't seen nothing yet.
The old adage is, if it is too good to be true, it probably is. Same with this charity.

I really don't think Barak Obama has anything to do with this. He didn't invent charging interests on loans. And it sounds like this happened under the Republicans watch. I love how some people are so upset that Obama won that no matter what is going on in the news, it is all his fault. Grow up people, Obama has and has nothing to do with this.

[tennartex]

Leon Panetta. Now let's take a look at his taxes. Oh, I forgot he is the head of the CIA and will not be subject to any checking by the IRS.

This lady will not be charged nor will she be in any bothered; she gave to Obama's campaign. The democrats protect their own.

[ioweign]

Did anyone expect anything less?? Seems par for the course. So students have to pay high interest rates, that is part of the Obamaeconomics. You ain't seen nothing yet.
The old adage is, if it is too good to be true, it probably is. Same with this charity.
Posted by platteman at 5:48 PM : Mar 3, 2009

February 22, 2005
Bush budget will drain student loans
Lindsay Messenger
Staff Writer

President Bush?s proposed federal budget, if approved by Congress later this year, would alter the availability and the amount of financial aid available for higher education. What Hamline students should be most concerned about is the future of Pell grants and Perkins loans, which Bush proposes to significantly change.

The Pell grant is a need-based award given to those in the lowest income bracket. Currently, Pell grant
recipients are awarded annual scholarships of up to $4,050. Bush has proposed an annual increase of
$100 in the Pell awards over the next five years.

While this federal funding increase will help the neediest students, it is likely to provide meager benefit to other students. The office of Fourth District Congresswoman Betty McCollum reports that 99 percent of all
Pell recipients will be left behind with the purportedly expanded Pell programs.

Furthermore, the current $100 increase for those students who would receive it amounts to an increase of 2.5 percent over last year, according to the office - a rate that barely keeps pace with inflation.

Though the proposed increase is small and falls short of Bush?s 2000 campaign promise of $5,100 for college freshmen, any increase is an improvement, said Lynette Wahl, Hamline?s director of financial aid.

?It?s been flat for the last three years, so we?re happy [the administration] is increasing it,? she said.

At Hamline, 541 undergraduate students (nearly one-third of total enrollment) are currently eligible for Pell grants. Nationwide, 10 million students are eligible for the Pell program.

Proposed changes in the Perkins loan program are more dramatic and potentially devastating for 14,000 Minnesota students, including 818 Hamline undergraduates who rely on them to pay for college tuition.

This year, Hamline was allowed a $4,000 cap on individual Perkins loans. This program would be eliminated altogether. Also eliminated would be low-interest fixed-rate loan consolidation and loan forgiveness options for graduates who enter the teaching force, the military, or law enforcement.

?The Perkins elimination will hit students very hard,? said Wahl.

Almost all students with Pell grants also rely on Perkins loans, which extends to middle-need students.
The Perkins loan is interest-free for nine months following graduation, after which it sits at a fixed rate of five percent.

This year the amount was capped at $4,000, an amount based on loan collections and other contributions. Without Perkins loans, students must borrow from non?federally funded or subsidized lenders, who will likely require a credit check and would not have a capped interest rate.