It’s one of the great cons of the last several decades. College lenders and their (mostly Republican) allies reduced state funding for colleges, watched with greedy eyes as universities were forced to hike tuition out of the reach of the middle class, and then, helped by government subsidies, loan-sharked families, earning billions.
Institutions like Sallie Mae lobby to “deregulate” tuition and reduce state funding, knowing college costs will skyrocket. Then, like magic, they are there ready to lend money to families for their children’s undergraduate education. Public universities exist because citizens recognized that everyone benefits from an educated citizenry. The benefits to the public greatly exceed the cost of providing the education.
We’ve watched with dismay as the health insurance industry spent millions on advertising and lobbying to derail health care reform. But the college lending industry is just as bad. In terms of simple, easy-to-see greed trumping the public interest, they may be worse.
The White House has been working on plans to take billions of dollars in ill-gotten profits from student lending con-artists and give it directly to students. Not so fast, say the money-changers who, like termites, are eating away at the temple of higher education.
The New York Times reported on the massive lobbying effort to kill reforms aimed at helping middle class families get ahead.
Sallie Mae, a publicly traded company that is the nation’s biggest student lender with $22 billion in loans originated last year, led the field in spending $8 million on lobbying in 2009, more than double the year before, and other lenders spent millions of dollars more, according to an analysis prepared for The New York Times by the Center for Responsive Politics.
The Times explains the industry lobby’s strategy:
Private lenders get a cut of the federally backed loans that they originate and service, with little risk of their own. At Sallie Mae, lobbyists for the firm are focusing on senators regarded as fiscal conservatives, as well as those in states that are home to lending centers with jobs at stake, including Florida, Illinois, Nebraska, New York and Pennsylvania, said John F. Remondi, chief financial officer for the company.
Look at that closely. Sallie Mae’s loans are government-backed. There is no risk to them. They are making billions from the sweat of American families trying to make a better world for their children.
Republicans, sneaking around under the anti-tax banner of Grover Norquist, first made sure public funding for universities would dry up. Then they and the lenders ride in, like pirates on the deck of their victims’ ship. “Oh, you can still go to college,” they snarl. “You’ll just have to pay tribute money to us now to do so.”
Adding insult to injury, Sallie Mae and others are funding their piracy protection initiative, I mean lobby effort, with taxpayer money. You are paying them to lobby against your interests and the interests of your children. Here’s Secretary of Education Arne Duncan:
Taking aim at Sallie Mae, the largest student lender in the country and a driving force behind the lobbying effort, Education Secretary Arne Duncan on Tuesday accused the company of using taxpayer funds to lobby and advertise, and cast its executives as white-collar millionaires uninterested in serious education reform.
“Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists — the backbone of the new economy — face crushing debt because of runaway college tuition costs,” Duncan said.
The lenders donate massive amounts to politicians to keep their piracy legal. In case you wondered, that means your tax dollars are being paid to politicians to protect the student loan pirates who benefit from the skyrocketing costs of college. The politicians have mortgaged your family’s future.
•In the 2006 election cycle, the largest single corporate source of donations to the National Republican Congressional Committee was a student-loan company, Nelnet, whose employees and political action committee gave $153,000.
•Employees of Sallie Mae, a company that finances student loans, gave more than any other entity to Boehner’s political action committee, providing more than $122,000 since 1998, according to an analysis early this year by the nonpartisan Center for Responsive Politics, which monitors fundraising.
Republicans deny that their legislative agenda has been influenced by those contributions. Boehner points to the fact that he did not shy from trimming lender subsidies in a 2005 deficit-reduction bill that wrung $13 billion in savings from the student-loan program.
Since gaining a majority in Congress, some Democrats are benefiting, too. A con is a bipartisan kind of thing. But, on behalf of Democrats, they have fought the student loan con for years. Here’s what the late Senator Edward M. Kennedy said in 2006:
It’s time to throw the money-changers out of the temple of higher education.
I have to disagree with you – to an extent.
We prove our commitment to this great nation and to our universities almost every day. Hundreds of thousands of Americans stand with hands over hearts and sing the Star Spangled Banner with conviction – in stadiums, arenas and baseball diamonds, etc. at some of the greatest universities in the world.
You pay more for the privilege, too. Soon there will be a Sallie Mae logo instead of the stars and bars….
Sorry but you’re high off your ass. Explain how ‘universities were forced to hike tuition out of the reach of the middle class’. Forced by whom or what? Explain how families are ‘loansharked’? I paid off my college loans a long time ago but as I remember they were at a lower rate than similar consumer loans with far more lenient repayment plans. Sorry but it’s not the worlds job to pay your bills.
I’ll never understand why political attacks from the right are always personalized. For the record, my family and I are done with college. It’s about the common good. Putting college out of the financial reach of the middle class is dangerous. We all gain from increased productivity, innovation, etc. The country — and Texas — recognized this long ago. Then came the assault on higher ed. Public funding diminished. Tuition had to be raised. No worries. There were lenders — with government guarantees (kinda socialist, really)to eliminate 100 percent of their risk — at the ready. In fact, they worked to deregulate tuition and cut public funding so loans would be necessary in the first place. All they got to do is print their money now.
All I know is that I started school in the 70s, paid off my loans and had a Pell grant, no problem. When I went to finish up a teaching degree in the mid 90s, I ended up with a loan, not a big loan, between 10 and 20,000 at 4%, that I was nonetheless still paying off 15 years later. Then my son was interested in a 3-year certificate type degree from a private college here in Texas as an in-state student, and it was going to cost $63,000 with no grants available, just loans. We had to figure something else out, as this was for a profession that he would likely be making only $30-$40,000/year, and that $63K figure seemed to me to be for something like a doctor or lawyer. Bears up what you’re saying. If Mr. Bandit paid off his loans many years ago, he doesn’t know what they cost now, which is what your piece was about.