Student Loan Charity Under Fire

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.

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.