• October 20, 2014

Sallie Mae Has Spent Millions Fighting President's Student-Loan Plan

Sallie Mae, the nation's largest student-loan company, spent $2-million on lobbying in the first half of this year in an effort to persuade lawmakers to consider alternatives to President Obama's plan to end bank-based lending to students and replace it with direct lending, according to an analysis by The Huffington Post.

The lender, which is pushing a counterproposal that would allow student-loan companies to originate loans before selling them to the government, has hired several Washington-based lobbying firms, including a group led by Tony Podesta, a top Democratic fund raiser with longstanding ties to members of Congress. But its key hire was Jamie Gorelick, a deputy attorney general in the Clinton administration and partner in the law firm of Wilmer, Cutler, Pickering, Hale and Dorr. The firm billed Sallie Mae $270,000 for its work in the first half of 2009, according to the analysis.

Sallie Mae spent $3.4-million lobbying last year, according to the Center for Responsive Politics. It also showered campaign contributions on individual members of Congress, including $26,150 for Rep. Paul Kanjorski of Pennsylvania, chairman of the House Financial Services Commitee and a key Democratic ally, and $10,000 on moderate "Blue Dog" Democrats. Among Democrats, the Blue Dogs have been the most vocal in their opposition to the president's plan, warning of job losses that could result from a switch to 100-percent direct lending.

Comments

1. _perplexed_ - July 30, 2009 at 05:11 pm

It is heartwarming to see that Sallie Mae can afford to spend so freely--at least someone has money to burn. I'm guessing that the "job losses" will be at Sallie Mae and its competitors?

2. atana09 - July 30, 2009 at 07:39 pm

Louis Brandeis "They control the people through the people's own money". When Justice Brandeis wrote that he was referring to the robber barons of the early 20th century, somehow it does not seem out of place used in reference to Sallie Mae. And that 3.4 million SMC used for lobbying likely did originate from the people, either out of subsidy payments, or from some poor students and families trapped in their Sallie Mae's often usurous debt game. The whole concept of originating the loans and selling them to the government, well that's the old privitizing profits and subsidizing risks shell game which has already SMC billions. Those billions have also made them the predominant problem in regards to educational funding policy. They literally have dictated educational funding policy to the detriment of student's, families, academe and the national economy. This has only been possible because certain members of congress are so deep into the pocket of Sallie Mae lobbyists, that by comparison the lint is on Mars. Job losses, only for the Sallie Mae minions. The effect of this company, and others like it, has been clearly detrimental to the national economy. The often usurous terms of their loans, are literally a debtors prison with no walls, and no limits in time. And as such the best of each new generation end up sending a undue amount of their resources to such as Sallie Mae, rather than to the purchase of homes, cars, consumer goods, or business endeavors. Our current student lending system is little more than a extreme example of how toxic trickle down economic theory actually is...and what a fiction the whole concept was and is. Somehow there is no way that the betterment of Sallie Mae's already bloated coffers can be traded for the loss of say, GM, Circuit City, or Mom's Cafe. And although it is not a overtly visible effect, the amount of money fed to Sallie Mae and like companies, by its captive clientele and the government, is massive, and it's billions which could have gone to more productive sectors of the economy. And should the blue dog Democrats, and the GOP manage to follow their masters lead, and block further reforms of student lending policy...well trouble's looming at the trough. SMC has already threatened to restrict student loans to gain the emergency 'liquidity' payments of a few years ago. Plus the billions in subsidies and other sweetheart provisions which are on going, massive and seemingly never ending cannot be borne too much longer by either the taxpayer or the government. Another looming problem is Sallie Mae controls about 40% of the some 580 billion in educational debt in the US. That particular balloon is not sustainable under our current depression, and it has been massively overleveraged. When it pops, it will destroy millions of lives...and no doubt Sallie Mae and other like companies will be the first at the trough to collect the bailout money... It will be interesting to see whose overall interests Congress (especially the Blue Dogs and GOP)is working for when this debate comes to a vote. Should they elect to preserve the current system, maybe we the people should demand Congress just give up the pretense and wear Sallie Mae corporation ball caps...

3. 11132507 - August 03, 2009 at 12:28 pm

And just think of how many lost jobs that $3.4M would have saved...SM didn't even play the lost jobs card until everything else they tried didn't work. They certainly can't go around arguing that the current FFELP student loan model works better for anyone. And being that they've entered the "if you can't beat 'em, bid on contracts" phase of their business model, there might not even be a big net loss of jobs. But if the 40% of $580B figure is accurate (and it sounds right), then it's only a matter of time before SM and their well-bankrolled beneficiaries in Congress roll out the "too big to fail" argument.

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