President Obama’s plan to eliminate bank-based lending from the federal student-loan programs is meeting more resistance, thanks to a changing political scene and aggressive lobbying by Sallie Mae and other big private lenders, The New York Times reported. The House of Representatives passed its version of the legislation last fall, but the Senate has not acted. The Democrats’ loss of a filibuster-proof majority in that chamber affects the measure’s chances, Congressional aides told the Times. Sallie Mae, which has put forward its own proposal for overhauling the loan programs, spent $8-million on lobbying in 2009, the Times said. That reflects a large increase since the first half of the year, when the lender’s lobbying tab stood at $2-million.
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7 Responses to Obama’s Loan-Overhaul Plan Faces Tougher Fight, Congressional Aides Say
11132507 - February 5, 2010 at 7:18 am
And once again, taxpayer money will be spent on making Sallie Mae executives’ golf courses, private jets and swimming pools instead of helping students pay for their education thanks to good old fashioned pay-to-play…and now with the Supreme Court’s seal of approval. And of course, a special shout-out to financial aid administrators who allowed their associations’ memberships and lobbying efforts to be completely highjacked by lenders.
cbr79 - February 5, 2010 at 8:57 am
In two big ways the Times piece, balanced overall, misrepresents what’s before Congress.The relevant savings number is not $80 billion–that’s the delta between Obama-style reform and the status quo.It’s a couple of billion, the delta between SAFRA and the community proposal. other is no longer $80 billion. The Administration is resisting reform that gets them the money it wants without killing jobs and consumer choice.Second, if SAFRA fails, it won’t be because of lobbyist, the Times’ headline notwithstanding. It will be because of the thousands of people who live in their states and who will lose their jobs for no good reason.
wmu78 - February 5, 2010 at 9:13 am
Sorry, #11132507. The aid associations were not “completely highjacked by lenders.” There has been since the dawn of Direct Lending, and continues to be, a vigorous debate within the associations over direct vs. bank-based federal lending. The sentiment has long been that having a choice of options has strengthened both programs.I echo your sentiment that Sallie Mae is not a white-hatted character in this production, but neither are they the only character. Those who support bank-based lending look at the smaller, more regional players and see the good they’ve done. Just as all of higher ed isn’t the Ivies (the national media coverage notwithstanding), all of student lending isn’t Sallie Mae.Had the Senate acted on SAFRA by now, we wouldn’t be having this discussion. The aid community would have hunkered down and moved on. Congressional inaction is the biggest concern at this point; vote it up or vote it down, but PLEASE vote on it!
11132507 - February 5, 2010 at 9:15 am
cbr79 – Sallie Mae and the like were fighting the Administration’s proposed elimination of the FFEL program tooth and nail for months before they started playing the lost jobs card. And many have suggested that the job loss claims are being exaggerated due to the significant volume of private loans, collection of existing loans, and even servicing of Direct Loans that FFELP lenders still have on their plates. If it was just about lost jobs, why is it so polarized? Only Republicans care about lost jobs? This has everything to do with multi-millionaires shelling out lobbying dollars (which, like all of their money, comes from taxpayers and student borrowers) to keep adding to their wealth.
11132507 - February 5, 2010 at 9:22 am
wmu78, we’ll just have to agree to disagree. I’m an aid administrator, a past president of my state association, a former NASFAA and regional association committee chair, etc, so I’ve been inside all of the debates. There are many examples to cite, including the letters and e-mails sent by state associations (but taken almost verbatim from lender communications) to members of Congress urging them not to eliminate FFELP, the so-called Friday the 13th Group, lender reps chairing state association government relations committees, etc. Yes, there have been debates, even wars, but we know what side always wins.
sniktaw - February 5, 2010 at 10:03 am
What the lenders and Sallie Mae fail to state is that FFELP is almost now. With ECASLA, most lenders are borrowing from Department of Education and then selling the loan notes back to the Department – right after disbursement. The Department then converts to loans to direct loans. Sallie borrows from DOE to make loans. Suzie Student borrows a FFELP loan from Sallie. Sallie then sells the FFELP loan to DOE, which turns it into a Direct Loan. Suzie now has a new lender. If it’s going to be a direct loan in the end, why go through the charade of FFELP. Now, when ECASLA expires, will the lenders stay in the FFELP program with their own money? If they do, FFELP will survive. If they don’t, FFELP is dead.
richardosmith - February 6, 2010 at 11:30 pm
Be very careful. These companies charge high interest rates, the advertised rate is ‘typical’. A friend of mine applied to one that was advertising a rate of 6.5%, but the quote he got was 12.5%. Anycompany that says ‘combine all your outgoings into one loan’ and then adds ‘and have enough left over for a new car or a holiday’ should be avoided at all costs.http://www.articlesbase.com/health-articles/extreme-britewhite-review-get-free-trial-now-1815590.html