The push by lobbyists of Citibank, JP Morgan, Sallie Mae and other student lenders to kill student loan reform is working.
Kent Conrad is trying to keep the President’s plan from going through reconciliation this year, which means it can’t pass for another year — and guarantees that the Wall Street banks can keep carving out their billions in annual fees.
Says Tim Ranzetta over at Student Lending Analytics, “Hmmm…the Democrats are opposing their own party’s bill.”
From the New York Times:
Provisions in a budget reconciliation bill must meet budget targets for reducing the federal deficit. Mr. Conrad said the education bill could no longer meet that requirement because the projected savings from ending the payments to private student lenders had decreased, according to a recent cost analysis by the Congressional Budget Office, while the cost of expanding Pell grants had grown. As a result, he said the bill as currently written would no longer reduce the deficit.
The House bill was projected to save $87 billion over 10 years and would have spent $87 billion on Pell grants and other education initiatives. Mr. Reid’s office said a more recent estimate showed the bill would increase future deficits by about $36 billion.
Yes, the new CBO score projects lower savings. Why would that be? Because so many schools have already switched to direct lending since SAFRA passed the House, and the savings are already being achieved, per the Washington Post.
That’s why George Miller and others are (rightly) asking Conrad to go with the old CBO score. For purposes of measuring future savings, rational people would think that if the program is already saving money, that means the claims about cost savings are true, and Conrad wouldn’t penalize students and colleges for that.
But, Conrad doesn’t want student loan reform to pass. Why? Well, because the student lending industry has jobs in North Dakota. Fifty-seven, to be exact. Blanche Lincoln, Jim Webb, Mark Warner, Tom Carper and the Nelson twins are helping him, because they’ve got jobs in their states too. From companies with deep pockets, private jets and personal golf courses to keep up.
According to the Wall Street Journal, Dick Durbin “said Tuesday that the loan package would probably be scuttled unless it helped build support for the health-care bill.”
So how are these Senators valuing jobs in their states, relative to the number of students in college who would be affected by this bill? Good question. Let’s look:
But, students aren’t sucking up government money to buy private planes for themselves, so they don’t have all that lobbying cash to throw around.
As I wrote earlier, SAFRA would not by any means eliminate all private student lending jobs — only the origination jobs, which represent a small percentage of those in the industry. Because Sallie Mae had to bring 3500 jobs back to the US in order to qualify for servicing contracts on the government’s direct loans, as Dave Dayen noted, there’s a good possibility that SAFRA would mean a net gain of jobs in the student lending industry in the US. And that doesn’t factor in the number of jobs saved or gained in education as a result of the $4.7 billion that would go to colleges across the nation in 2010 alone.
So why are these Senators ready to kill this opportunity to pass student lending? Well, because one way or another, the big banks always win. They carved out a sweet and completely unnecessary business for themselves by lobbying Congress for pennies on the dollars, and guess who gets to pick up the tab?
You. Me. Anyone who’s ever had a student loan. To see how private student lenders jack up fees and padded loans so people wound up paying twice the amount of the original loan, see David Brancaccio’s piece on PBS Now.
Enough with Wall Street banking lobbyists. They’re destroying the country and now they want to scrap the higher education system so they can afford their private planes.
Jet fuel doesn’t pay for itself, you know.
We’re going to take out ads in student papers in the above states, and those of other Senators who have been active in blocking the bill, letting students know how their interests are being sacrificed to Wall Street. If you’d like to donate, you can do it here.
And sign the petition — tell Congress to pass student loan reform now. Not next year.
(photo from Richard Eskow, Nightline)