Student lending

So the vote on Ben Nelson's amendment to the Higher Education Access Act didn't happen today, but will likely go down tomorrow. If any of the senators listed below are from your state, you've still got time to give them a call and ask them to vote Yes on the bill, and NO on the Nelson-Burr Amendment.

US PIRG has a new analysis of the amendment and why this is important:

The Nelson-Burr Amendment cuts $4.2 billion from need-based aid to low-income students over the next five years and gives the bulk of it to for-profit student lenders.

The Nelson-Burr amendment reduces aid for the neediest students by $290 per year, or nearly $1200 over their 4-year college career.

The amendment lowers the subsidy reduction for-profit lenders from .5 percent to .35 percent and pays for it by cutting $4.2 billion from the Promise Grant program.

The Nelson-Burr amendment takes grants away from low-income students and gives it back to banks including:

• $800 million to Sallie Mae over the next 5 years.
• $160 million to Nelnet over the next 5 years.

The Senate bill reduces less from private student lenders than both the President’s Fiscal Year 2008 budget and the House reconciliation bill. The Nelson-Burr amendment would cut back on subsidies even further, at the expense of the more than five million students who receive Pell Grants every year.

U.S. PIRG urges Senators to vote against the Nelson-Burr Amendment to S. 1762

$800 million to Sallie Mae, $160 million to NelNet. Meanwhile we're getting saddled with even more debt. This aggression will not stand. Call your Senator.

Update:
Here's the list of swing votes who might side with Nelson and the corporate lenders over debt-ridden students:

Alexander (R - TN)
Bayh (D - IN)
Carper (D - DE)
Coleman (R - MN)
Collins (R - ME)
Hatch (R - UT)
Landrieu (D - LA)
McCaskill (D - MO)
Murkowski (R - AK)
Nelson, Ben (D - NE)
Nelson, Bill (D - FL)
Roberts (R - KS)
Tester (D - MT)
Webb (D - VA)

Call their offices and urge them to vote YES on S. 1762, and NO on the Nelson-Burr Amendment. The Capitol Switchboard can be reached at (202) 224-3121.
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Cross posted at Daily Kos and MyDD. Please recommend.

Last week, most student organizations rejoiced as the Democrats shepherded the Cost of College Reduction Act through the House of Representatives. The Bill represented the largest increase in student aid since the G.I. Bill. It accomplished this in part by cutting excess government subsidies to corporate lenders, who were fattening their wallets on the backs of debt-ridden students. Republicans tried unsuccessfully to kill the bill in the House. The Gavel had an excellent post about that fight and the bill’s passage.

The Senate version of the bill – The Higher Education Access Act of 2007 - is set to provide $17 billion in student aid to college students and recent graduates, among other provisions to further protect students. But Ben Nelson (D-NE), whose home state is also home to Nelnet, one of the biggest corporate lenders, is trying to weaken the Senate version of the bill and return $3 billion of that to the lending industry so they can continue to line their pockets on with corporate welfare.

What I’m hearing is that the cloture votes on Iraq and the DOD reauthorization are going to fail, and the Higher Education Access Act of 2007 will be brought to the floor instead, with voting to be scheduled for today or tomorrow. Right now, Republicans supposedly have 3-6 Democrats willing to side with lenders on the Amendment, so they are likely to see it pass.

Here’s what you can do:

• Call your Senator and urge them to vote YES on S. 1762, and NO on the Nelson-Burr Amendment. The Capitol Switchboard can be reached at (202) 224-3121, and the operators can tell you both who your Senators are and connect you.
• Also ask which way your Senator plans on voting. If we can find out who those 3-6 Democrats are that are supporting lender subsidies over students we can ratchet up the pressure on them.

If you find out which Democrats (besides Nelson) are in favor of the Nelson-Burr Amendment, contact me and I'll keep an updated list and post around the blogosphere.

The lenders (and Nelson’s) argument is that cuts in subsidies need to be scaled back so that lenders can offer students benefits, and that subsidy cuts will cause the loan market to consolidate and there will be less choice for students. This is bunk. The loan market is already consolidated, and less than 10% of students ever see a dime of those supposed “benefits.” Meanwhile, groups like NelNet and Sallie Mae have used those government subsidies to give outrageous benefits packages to CEOs, reap hundreds of millions in additional profits, and improperly wine and dine university officials who should be protecting the interests of students.

$3 billion could fund 588,000 Pell Grants at the maximum level of $5100. As millions of students are getting priced out of college, or saddled with unmanageable levels of debt, our government should be voting to protect and aid students, not funnel more money to corporations already reaping hundreds of millions in government subsidies and profits.

This is a response from Tony Cani, Political Director of the Young Democrats, to a blog I wrote earlier this week. --Mike

I am happy to clarify our involvement in College Affordability work. I believe that you will all find that Michael's concerns that YDA was just posturing instead of taking action are grossly unfounded. In fact, we are aggressively pursuing steps beyond his suggestions to "capitalize" on the GOP no votes.

Quick facts:

* YDA is an active member of the College Affordability coalition which works with other youth organizations to get legislation through Congress that helps students. (It is important to note that we are the only partisan organization actively involved).

* Over 2200 YDA members sent letters to congress pushing for this legislation over the last week from www.yda.org/writecongress. This type of lobbying is something House leaders DESPERATELY wanted support with.

* YDA pushed for phone calls directly to House members the day before and day of the vote, resulting in a few hundred calls coming from www.yda.org/callthehouse.

* This isn't the first time we've done this. Since HR5 was up during the first 100 hours, we have employed the tactics above, local chapter efforts, and a text messaging campaign. To "sign our mobile petition" for lower interest rates you can text "COLLEGE" to 3-5-3-2-8. We then send updates to your phone on when votes are happening etc.

From the beginning of the Democratic majority in Congress, we have seen college affordability work as an opportunity for us in three ways:

As Fred reported yesterday, the biggest student aid reform since the GI Bill passed with overwhelming support in the House of Representatives. A similar bill (with better provisions for Pell Grants) is working its way through the Senate. Yesterday, President Bush issued a rather toothless veto threat against the bill.

This same week, we saw the corporate lenders strategic playbook leaked onto the web, in all it's lobbyist/monied-interest/influence peddling glory. Sallie Mae and their corporate buddies are already plotting to recover as much ground as possible - even before the legislation has been signed into law. They're losing this issue, but their strategy is still that the best defense is a good offense.

In response to all of this, the College Democrats and the Young Democrats issued press releases congratulating the Democrats for following through on their election promises and condemning Republicans for obstructing aid to needy students. Case closed, job well done.

Fred, on the other hand, created a list of all the Republicans who voted against the bill, singling them out as future electoral targets. Fred was thinking like Sallie Mae. He's pushing an issue we're winning for maximum gain - not just on the current debate, but for the future of student loan reform and for a whole host of other issues that will tilt our way if we strengthen our hold on Congress. Student lending can be a lever to give us bigger, stronger majorities that can accomplish greater change on other issues.

Why aren't the official youth arms of the Democratic Party thinking the same way?

Over at Open Left, they've got a great new feature called Right to Respond. Any organization that is featured critically in a blog has the right to guest blog their response. It's a good policy. If someone from Young Dems or College Dems wants to clarify their position or elucidate a longer term strategy for this issue, I'm happy to let them post here.

The US House has overwhelmingly passed student lending reform, 414-3. The Chronicle of Higher Education has a good summary:

Introduced in February, the Sunshine Act underwent significant revisions in the days leading up to the vote. While the original would have required college officials to disclose their conflicts of interest, the revised bill would seek to eliminate such conflicts altogether, in part by barring financial-aid officers from serving on lenders’ advisory boards or accepting staff support from lenders. It also would outlaw several practices that have been uncovered by parallel investigations in Congress and the New York attorney general’s office — including revenue-sharing agreements, which give colleges a portion of the profits on loans taken out by their students, and opportunity loans, which are pools of private loan money that lenders give to colleges to secure spots on their preferred-lender lists.

The Rock the Vote blog also has details.

Higher Ed Watch has the details on why this matters for your pocketbook and some ideas on how to solve the problem (beyond the Sunshine Act).

These measures alone are unlikely to get to the heart of the problem, which is that banks don't compete for student business. Instead, they jockey for a spot on colleges' "preferred lender" lists, virtually guaranteeing that colleges will funnel students in the direction of favored lenders, regardless of interest rates. There's no incentive to ensure that students get the best deal.