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STUDENT LENDING BOONDOGGLE WARRIORS.
The crony capitalists who make billions acting as middle-men for federal student loans aren't happy that the president wants to cut their unnecessary subsidy, and they're making their concerns known:
“The administration has decided that it wants to capture the profits of federal student loans,” said Kevin Bruns, executive director of America’s Student Loan Providers, a trade group that is fighting Mr. Obama’s plan.
My goodness. Capture the profits, eh? Sounds like dread socialism. Except that those profits are taxpayer dollars that are given to these corporations in exchange for, well, nothing the government couldn't do more efficiently on its own. If you've been following the rapidly evolving dynamics of American capitalism recently, you're probably prepared for the next paragraph:
Just last week, Sallie Mae reported that despite losing $213 million in 2008, it paid its chief executive more than $4.6 million in cash and stock and its vice chairman more than $13.2 million in cash and stock, including the use of a company plane. The company, which did not receive money under the $700 billion financial system bailout and is not subject to pay restrictions, also disbursed cash bonuses of up to $600,000 to other executives.
This is a great chance for Americans to choose directly between paying huge bonuses to financiers or saving taxpayer dollars, all while helping more students go to college. This fight is also an opportunity to demonstrate the president's bipartisan side, though, since there are both Democrats and Republicans arguing for the lenders interests, and, as I learned reporting on this issue years ago, a senior Republican on the House Education Committee, Representative Tom Petri, has been an advocate for eliminating this subsidy for a while. He's also one of the Republican legislators whose district President Obama won last fall, so there's an added incentive for him to help the chief executive save everybody some money. Representative Howard McKeon, the ranking member of the Education Committee, has been a strident opponent of student loan reform for years, as has House Minority Leader John Boehner. Both, incidentally, have taken hundreds of thousands of dollars in donations from student lenders.
-- Tim Fernholz
COMMENTS (4)
I'm pleased to see the Obama administration acting against these bankers to help out poor (most) college students. I think that Obama should not only help out the poor in the U.S. but also abroad. The Borgen Project has good info on the estimated cost of ending global poverty:
$30 billion: Annual shortfall to end world hunger.
$550 billion: U.S. Defense budget.
Posted by: David Waters | April 13, 2009 2:33 PM
Alas, too late for me. I was snookered into a loan for 40k from Sallie Mae courtesy of my institution of higher learning.
At the time, I thought it was a federal agency.
Too bad this isn't retroactive.
Posted by: leo | April 13, 2009 4:21 PM
Not surprising Sallie Mae tries to float a negative story about student debt just as they are scrambling to have their government subsidies eliminated.
In separate news, Sallie Mae CEO Albert Lord was given a 3 million dollar raise - from 1.7 million a year to 4.7 million per year.
But to Albi's defense, he is in the midst of building his very own private 18 hole golf course on one of his three mansioned estates.
Sallie Mae has two corporate jets, one for the express use of Albi to shuttle between his estates in Maryland and that in Naples Florida.
Posted by: albi lord | April 13, 2009 5:43 PM
Well, I'm a conservative and I'm for anything that saves the taxpayers money, so count me in on this one.
Next stop: ag subsidies!
Seriously, Democrats and Republicans alike talk about how hard it is to cut spending, but anyone who even glances at the federal budget can find billions to cut, and does every program really need an 8% increase every year?
What they really mean is, "I've got a major campaign contributor who needs this money, so cutting spending is hard."
Posted by: Adam Herman | April 16, 2009 2:16 AM