On Wednesday, the U.S. Department of Education offered a full-scale plan to bail out the student loan industry. Under the plan, the Department will not only buy student loans from lenders, as Congress authorized it to do, but it will also purchase interests in pools of loans to provide lenders with additional liquidity.
Despite these aggressive actions, Rep. Paul Kanjorski (D-PA) wants more. He applauded Education Secretary Margaret Spellings for her "initial plans" but urged her to take even stronger steps "to maintain an effective student loan distribution system."
"[W]e must remain vigilant in the coming weeks and take further administrative and legislative action, as needed to address the problems in the student lending marketplace," he contends. In other words, he is going to continue to push proposals that the student loan giant Sallie Mae has promoted to resolve "the crisis" -- pressing Congress, for instance, to pass bills that would allow the Treasury Department's Federal Financing Bank and the Federal Home Loan Banks to inject cheap federal capital into the student loan market.
Over the past six months, no Congressman has pushed as strongly for a lender bailout as Kanjorski. In doing so, he has consistently presented himself as a champion for students. "Since identifying the student loan crunch problem early in 2008, I have led the efforts in Congress to raise awareness and identify solutions," he said at a roundtable forum he held in his district on the subject, adding that he would help insure that "students' long-term dreams won't be ruined."
But what he has been less upfront about in Washington, DC (until we asked for comment yesterday morning) is the political stake he has in the fortunes of student loan giant, Sallie Mae. The company is one of the largest employers in the Congressman's economically-depressed district.
Kanjorski is locked in a tough reelection battle, probably the toughest since he was first elected to Congress in 1984. If Sallie Mae decides to shut down or significantly downsize its giant loan origination and processing center in Wilkes-Barre, as it has done in some other states, he could find himself with some pretty unhappy constituents. Today more than 900 Pennsylvania residents are employed at the 133,000 square foot center, which is one of Sallie Mae's largest facilities.
Keeping Sallie Mae Happy
By his own account, Kanjorski played a pivotal role in the late 1980's in persuading the loan company to move its origination and processing center to his district. And he has often boasted, in his reelection campaigns, about how he has used his leverage as a leading member on the House Financial Services Committee to keep Sallie Mae healthy and happy so that it would continue to increase its presence in his district.
"I got Sallie Mae here and I kept Sallie Mae here because of my activities with them at a federal level making sure that we have a very favorable climate for them to remain," he said while defending his record during a wide-ranging interview with the editorial board of the Wilkes-Barre Times Leader shortly before the November 2002 Congressional elections. Similarly, on his House website, he says that "his influence played a part in Sallie Mae's decision to maintain current staffing levels at its Wilkes-Barre center even as other centers were cut back or closed."
Sallie Mae officials have offered similar accounts. In 1998, a Sallie Mae executive was quite candid about why the company had decided to boost employment at the processing center. "Congressman Kanjorski is a fierce and effective advocate in Washington for Sallie Mae and the student loan program," Joe Bailey, who was the company's vice president of Northeast Operations at the time, said in a news release put out by Kanjorski's campaign. "That advocacy was a major factor in the decision to expand employment at the Hanover Township facility." [The processing center is located in the Hanover Township Industrial Park, which is in Wilkes-Barre.]
Sallie Mae has rewarded Kanjorski for his support in other ways as well. According to federal campaign finance records, the loan giant has contributed, through its PAC and from individual company officials, nearly $70,000 to the Congressman's campaign coffers over the last decade. In addition, the Sallie Mae Fund, the company's charitable arm, has made generous contributions to one of the Congressman's pet causes: donating $1 million in 2003 to the Wilkes-Barre Catholic Youth Center, which provides daycare and overnight care to children from primarily lower-income and minority families. Kanjorski has long championed the center and fought to get federal funding for it. In Sallie Mae's news release, the center's executive director "expressed deep gratitude" to the Congressman for helping to secure the loan company's donation.
To read more, please visit www.HigherEdWatch.org