The Chronicle of Higher Education: Colloquy

The student-loan industry and for-profit colleges achieved most of their goals in a bill to renew the Higher Education Act that key Republicans in a House of Representatives committee introduced this year. For those interest groups, the legislative victory came at a price. A Chronicle investigation has found that, in just a year and a half, the groups gave almost $1-million in campaign contributions to members of the House committee. Can open-handed congressmen remain evenhanded as they consider the bill? Is there a direct correlation between political donations and legislative clout? Are traditional colleges hurting themselves by not making such donations on their own? Read more...

The manner in which Sallie Mae, for example, is allowed to calculate interest is unusual and would be considered usurous for other entities, such as a bank. In addition, they have been awarded the legal right to refuse to refinance any loans once they have been consolidated. So if students have consolidated loans say at 9.5% interest, unless they obtain bank financing (which is usually not possible) they must continue to pay at these high rates. That would be akin to a bank being supported legally to refuse to remortgage a home when the rates decrease.
This situation certainly appears to be related to the financial incentives provided to congress members. Sad!!

For-profit institutions are not able to regulate themselves and the accreditation agencies have reneged on their duty to look after the interests of students re: their education and what they have a right to expect. There is a distinct 'dumbing down' of education which is more commonly associated with the accumulation of certifications----rather than education.

As an employee of one of the largest for-profit institutions I would have to agree that they are absolutely incapable of regulating themselves. Generally, the for-profit mentality is to operate under policies, that could be best described as unscrupulous, until they get caught. The for-profit institution I work for is under close scrutiny by the dept. of ed. for fraudulent financial aid applications and is threatened with several class action lawsuits. In any for-profit, and I have had the opportunity to work for two of them, education becomes the secondary objective behind the profit motive. The very notion that each dept. in a for-profit institution is beholden to a target number, (i.e. enrollment quotas, attrition quotas, placement quotas), which do initally spur "productivity," inevitably lead to fraud and deceit. This behavior becomes a product of these publicy traded institutions which must show a measure of growth each and every year. Eventually, the demands of "the street" pressure, for-profit college presidents, directors of admissions, directors of education, and financial aid directors to commit acts which stem from making up false grades, submitting false financial aid paperwork, to lastly, enrolling a student, who can barely read & write and would be better served at an adult school, but will be enrolled because the admissions director needs the number. It is this kind of rampant and often unregulated behavior, which if left to infiltrate and sway public policy will only lead to further corruption and consumer fraud against the uniformed student, who implicitly trusts and believes the for-profit admissions representative just because the school's moniker has the word "college" on it......

Disclaimer: I'm the legislative chair for the nation's graduate student representative organization, so I have a biased view of this issue. We *are* unhappy about the huge donations going to Reps. Boehner and McKeon, because students have been completely shut out of the process by the majority party. The bill they've drafted would do a lot of harm by eliminating fixed-rate consolidation. We weren't even asked about our thoughts on that (and by contrast, Representative Miller and his staff *have* contacted us, as has Senator Dodd from HELP), and as far as we can tell there's no willingness to negotiate.

That brings me to my main point. I *also* serve on the Board of Directors for one of the top ten Federal PACs. We often explain to our members that our dollars don't buy votes -- they buy access. Campaign contributions open a Member's office door so you can sit down and make your pitch in person. You may still lose once you get to make that pitch, but that's part of the process. The point is, those who can make big-bucks contributions (hint: not students) can get access to real decisionmakers, and that's the real effect we're seeing here. It's not a case of bribery, it's a case of the lenders and the for-profit schools being able to shout louder and make their message heard more easily.

As we discuss this issue it is important that we define the "student-loan industry". The industry mentioned in the article refers to private lenders involved in the Federal Family Educational Loan Program (FFELP). The FFELP business is one of the most profitable in the country. Private lenders make the loans and reap the profits. The Federal Government takes the liability, in case of default, and guarantees a minimum profit margin to the lenders. The alternative to FFELP is the William D. Ford Federal Direct Loan program (DL). Administration of DL is coordinated directly between higher ed institutions and the Federal Government. Private lenders are not involved in the process. According to budget figures put forth by President Bush DL is significantly cheaper to taxpayers. This is due to the absence of the payout to private lenders and the benefit of loan interest being returned to federal coffers.

The primary motivation of "student-loan industry" contributions revolve around the protection of FFELP and the destruction and/or diminution of DL. Those in congress who have been in support of DL have not received the large lender "contributions". The question, then, is whether the contributions to targeted legislators affect the prevalence of either loan program. Both programs should coexist and DL must not be diminished through the contributions of the powerful banking lobby.

I find it amusing that when students are "left out of the decision process" there is something automatically wrong. So I guess when the general public (i.e., the taxpayers) don't get the same access as say the PRIGs (public interest research groups) that push all kinds of leftist political agendas for students that's not a problem?

And while we're at it, why is buying access a bad thing? Oh, I get it. The political contributions from radical leftist organizations such as the AAUP and the NEA are perfectly fine. It's just if someone else does it that its bad.

As usual, the liberals are oh so hypocritical...

I'm familiar with the idea that 'contributions don't buy votes, they buy access'; but given that 'access' is guaranteed through the First Amendment's right "to petition the government for a redress of grievances", I have to wonder just what is being sold here. If I have a 'right' that works better if I cross somebody's palm with silver, isn't some sort of corruption being worked?

This is probably the meal that will choke the gutenous cat. Education as a farce has mushroomed all over the nation. Students hoping for a future-- or maybe trying to postpone it-- have seized upon what seems like "free" money to go to school. As a result, upon graduation, many find themsleves no more employable than before but with a long term high interest debt to a government that can collect it about as easily as IRS. Meanwhile, with so many loans available, "teaching" institutions have allowed themselves to demand outrageous tuitions and faculty outrageous salaries-- especially the prestige faculty. I think that the spotlight's sharp edge should not end on for-profit institutions. Much light needs to be shined on universities that offer $100,000 + for "PRESTIGE" faculty.

There is security but no big cash cow in education. You make your choise as a grad student. But to see college profs get security AND over $100,000 a year is a bit much. Even worse are some of the outrageous administrative salaries. It is here that the "profit" in for profit is quite suspect. How can a product of most dubious use in emloyment be assured such luxurious renumerations?

Community colleges will soon be drying up this source of revenue and the sooner the better-- Bush or Kerry, the community colleges will mushroom, meeting the standards of the communities they serve rather than seeking the tolerance of corrupt politicians.

A higher-education sellout on Capitol Hill?