"A child's learning is the funtion more of the characteristics of his classmates than those of the teacher." James Coleman, 1972

Friday, July 13, 2007

Sallie Mae and Her New Sugar Mamas?

The sleazebags that run the student loan corporations are in a panic. The House just passed its version of a relief bill that would cut interest rates to Boehner's army of loan sharks, cut $19 billion in subsidies to these bottom feeders, and increase Pell Grants. Sallie Mae's lobbyists have never been so busy trying to buy votes in the Senate to alter this picture, and it seems to be having some effect. The Senate version of the bill so far leaves the high interest rates in place, which could translate to billions for Sallie Mae.

Which version of the bill does this corrupt-to-the-core Administration like? And which one is it already threatening to veto? And which one is Sec. Spellings criticizing for not doing enough for minority students, while she lauds the other as "a good, strong step forward"? If you don't know the answers to these questions, go sit in the corner and put on your dunce hat.

And why has the Senate version not included thus far the cuts in interest rates that the House version includes? Could it have anything to do with Sallie Mae getting to Mary Landrieu, who could be poised to become the "John Boehner" of the Democratic side of the aisle in the Senate? From the Times:

. . . . The Senate plans to follow later this month with its own bill that would cut subsidies by $18 billion and increase Pell grants but not cut interest rates for borrowers. Because of special language inserted in the budget, the legislation is not subject to a Senate filibuster and needs only a simple majority vote to pass.

The White House revealed its preference yesterday, stating that if the House bill were the one to win final approval, advisers would recommend that the president veto it for not directing enough new money to the Pell grants for low-income students.

The lenders say they are fighting for survival. “Our view is that the combination of these cuts could destabilize the program significantly,” said Kevin Bruns, executive director of America’s Student Loan Providers, a Washington group. “Some companies are going to exit.”

The sponsors of the bills were dismissive of the accusations that black students would suffer. Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Education Committee, said, “If Sallie Mae really wants to help minority students, it should support our bill to provide the largest increase in student aid since the G.I. Bill.”

But some of the lobbying appears to be paying off. Senator Mary L. Landrieu, Democrat of Louisiana, wrote in May to the majority leader, Senator Harry Reid of Nevada, echoing loan industry talking points.

“Some of the changes being discussed could have a very harmful impact on students, parents, colleges and universities in Louisiana, particularly those students attending the many historically black colleges and universities in our state,” Ms. Landrieu wrote.

Ms. Landrieu’s press secretary, Adam Sharp, said her letter was prompted by a letter from the president of Dillard University, a historically black institution in New Orleans. Mr. Sharp added that the senator was still studying the legislation and had not taken a final position. A spokeswoman for Dillard, Karen Celestan, said lenders had not communicated with the university.

Another Democrat, Representative Lincoln Davis of Tennessee, wrote a letter to Speaker Nancy Pelosi of California, expressing worry that cuts to the guaranteed loan program could hurt students. Mr. Davis’s press secretary did not return calls for comment yesterday.

Supporters of the legislation say they are being forced to work harder than they expected to shore up support, given recent revelations of conflicts of interest in the student loan industry.

“It’s made us increasingly busy in explaining why some level of subsidy cuts is really appropriate,” said Luke Swarthout, of the U.S. Public Interest Research Group in Washington.

The unions have also swung into action to counter lenders’ efforts to make inroads with their members.

“The student loan program has been subject to abuses that harm, not help, students and their families,” Richard L. Trumka, the secretary-treasurer of the A.F.L.-C.I.O., wrote to national and state union officials and the organization’s executive council.

Harrison Wadsworth, special counsel to the Consumer Bankers Association, said the organization had contacted chambers of commerce, as well as unions. “We didn’t target union leaders,” Mr. Wadsworth said.

At the United Negro College Fund, Dr. Lomax said he had listened carefully to the arguments of Sallie Mae and was unconvinced. “I was not prepared to support their position,” Dr. Lomax said.

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