The Education Department’s (ED) Inspector General (IG) released a report on Monday claiming that Nellie Mae, a subsidiary of loan giant Sallie Mae, improperly received $22.3 million in taxpayer subsidies from ED between 2003 and 2006. The report is the latest episode in what has come to be known as the “9.5% scandal,” in which student loan companies continually refinanced certain loans which were eligible for additional federal subsidies.
The IG recommended, among other things, that ED force SLM to pay back the ill-gotten subsidies. So far, only NelNet has been forced to return these kinds of improper payments, and even this company was allowed to keep nearly three hundred million dollars in improper payments.
I hope that Obama’s ED does not follow in the foot steps of the Department under President Bush. They should make sure that no one can raid the American treasury and keep the booty.
Unfortunately, Sallie Mae and other student loan companies are also getting rich from wasteful—but totally legal—government subsidies. Luckily there is now a plan in Congress, originally proposed by President Obama, to eliminate all wasteful subsidies to student loan companies and use the $87 billion in savings to make college more affordable and accessible. The loan companies have already spent millions lobbying against it, so it is really important that Congress hears from you.
In a bold editorial today, The New York Times threw its support behind the Student Aid and Fiscal Responsibility Act (SAFRA), which was passed by the House Education and Labor Committee yesterday. Despite bi-partisan support for the bill in committee, many Republicans in Congress and in the Senate are gearing up to fight tooth and nail to defeat the bill and protect the interests of banks and student loan companies. As the Times says in the editorial:
“The arguments for passing this bill and ending the subsidy program are powerful. But the Republican leadership has distorted the debate by describing the bill as a plan for pushing private capital out of student lending. It would be more accurate to describe it as a plan for pushing corporate welfare out of student lending.”
Read the full editorial here, and then take action to tell Congress why we need to pass SAFRA now!
The House Committee on Education and Labor has put up a ton of information on their site about the Student Aid and Fiscal Responsibility Act (or SAFRA as we like to call it around these parts.)
One of the most interesting and useful things on the website is a myth vs. fact crib sheet about student loans under the new plan. It debunks a lot of the misleading arguments that opponents of the bill are already using to try to bring Congress over to their side, and are sure to rely in the coming weeks and months as the debate heats up.
Be sure to check it out so you will be armed with the facts to defend the bill, and take action today to tell Congress why they should support this landmark legislation!
“Campus Progress applauds President Obama’s new community college initiative, which would allow millions of Americans to pursue higher education and become more competitive in the workforce.
The funding of this new initiative depends in part on passage of legislation enacting the President’s proposal to switch to all direct lending for federally-guaranteed student loans. That plan would save the government approximately $87 billion over 10 years, and part of this savings – $12 billion – would be used to fund the community college initiative.
Thus, a clear choice has just become that much more obvious: Congress can vote for more wasteful subsidies for banks, or they can stand with young people and displaced workers seeking an education.”
If you are struggling to make your monthly payment on your student loan bill, or are interested in a career in public service, you should check out this new educational video by the Project on Student Debt:
Students around the country are getting together on Facebook to tell Congress that they should put students over banks! Groups are going up in each state, and each group will serve as a petition to the state’s Senators. The petitions call on Congress to support President Obama’s plan to cut wasteful subsidies to banks, and use the estimated $94 billion in savings to provide grants for students.
Campus Progress and partner organizations (PIRGs, USSA, etc.) will make sure to let Senators know about the petitions. Join your state’s petition, and invite your friends! You can find a link to your state’s group here:
Last Thursday, the House Committee on Education and Labor held a hearing on President Obama’s proposal to cut wasteful subsidies to student loan companies in order to increase grants to low and middle income students. Campus Progress Action submitted a statement to the committee—check it out.
Here are some clips from the hearing:
Testimony from Robert Shireman, who is the Deputy Under Secretary for the U.S. Department of Education and the former President of The Institute for College Access and Success.
Rep. Rob Andrews questioning the witnesses. For a bit of comic relief, check out Rep. Andrews questioning Dr. Richard Vedder, a conservative economist that writes about higher education issues, at 3:39.
President Obama has a plan to make college more affordable for millions of Americans. The plan would save almost ten billion dollars a year by shutting down a program that gives banks wasteful subsidies on student loans, and devote the savings to Pell Grants to help students pay for college. Unfortunately, studentloancompanylobbyists are pressuring Congress to save their wasteful subsidies at the expense of students and their families.
Join with Campus Progress: Choose students over banks, because we need a better future, and because we are fed up with banks taking billions from taxpayers for no good reason.
The Institute for College Access and Success put out a fact sheet yesterday examining the challenges that many community college students face when it comes to financing their education. Most importantly, TICAS find that community college students have higher levels of unmet need—the gap between available resources, including financial aid, and the cost of education—than public and private four year students. Here are a few quick graphs made from the data:
Note: These chart reflects the percentage of studentswho have documented financial need, not all students. In case you were wondering what portion of all students at the different kind of schools had documented financial need: (more…)
There is an interesting article today in the Washington Post about the schism between Sallie Mae and other student loan companies on the loan giant’s alternative proposal for student loan reform. It includes a very strange quote from John Dean, special council to the Consumer Bankers Association President, comparing the proposal to “pornography.”
Campus Progress and other groups that fight for the interests of students are also opposed to the proposal, but we wanted to make sure that lawmakers and young people are adequately warned about the raunchy content that all of the warring loan company camps are putting out, as well as the President’s proposal.(more…)
Funding our Future is a campaign to pass a progressive federal budget for 2010 and ensure that our nation.s key economic choices invest in our education, spark reform of our health care system, and address climate change through cap and trade and clean energy investments. Click here for more info.
The Education Department’s (ED) Inspector General (IG) released a report on Monday claiming that Nellie Mae, a subsidiary of loan giant Sallie Mae, improperly received $22.3 million in taxpayer subsidies from ED between 2003 and 2006. The report is the latest episode in what has come to be known as the “9.5% scandal,” in which student loan companies continually refinanced certain loans which were eligible for additional federal subsidies.
