Maybe it was because my step-grandmother objected even to "darn" as an epithet in her household. Maybe it's just because I think name-calling doesn't accomplish much except to anger the person at whom it's directed. Maybe I'm just a wimp. Whatever the reason, I'm not much for profanity. I don't need to put in front of "war criminal" when speaking of Dick Cheney. Or resort to Rahm Emanuel's favorite or when I bellyache about the maneuvering and put-downs of the chief of staff himself. Or offer a string of s and s and s when referring to the oligarchs who have enriched themselves at the expense of other Americans over the past 30 years while proclaiming that theirs is the natural order of things.
But sometimes and just don't cut it. This is one of those times. And, sad to say, it's some Senate Democrats who have pissed me off. These assholes -
seven now six of them [see below] - stand in the way of progressive legislation that would save the federal government $87 billion over a decade and improve life for college students - most particularly, lower-income students - by increasing the number and size of Pell Grants, reducing interest costs on student loans and getting rid of the publicly subsidized private student loan industry that has, when you drill down to its core, ripped off students for years. The seven six: Blanche Lincoln of Arkansas; Kent Conrad of North Dakota; Ben Nelson of Nebraska; Bill Nelson of Florida; Thomas Carper of Delaware; Mark Warner of Virginia; Jim Webb of Virginia. [Update: Conrad has apparently changed his mind.]
The legislation in question is SAFRA, the Student Aid and Fiscal Responsibility Act, which passed the House last September by a vote of 253-171. Six Republicans voted for it. Four Democrats voted against it. And then it was sent to the Senate, where it now sits as part of the budget reconciliation process, thanks to President Obama's pressuring of Majority Leader Harry Reid. If it doesn't pass this year, it's dead until next because only a single reconciliation can be cleared until a new budget resolution is passed.
The legislation would end taxpayer-subsidized private lending under the Federal Family Education Loan program, which dumps $8.7 billion a year into the hands of companies such as Sallie Mae, Citicorp and the like. The cost of those loans is as much as 20% higher than government loans. Instead, all loans would be provided to students through the federal Direct Loan program that currently competes with private lenders at many universities, colleges and community colleges across the country. It's an instance when competition doesn't do anybody but the banks any good. Students lose, taxpayers lose.
In his State of the Union President Obama urged the Senate to pass the law he had previously called a "no brainer." But since then some brainiac bank lobbyists have aggressively campaigned to crush the legislation. These feeders at the public trough have spent millions to hang onto their billions by keeping SAFRA from happening. Of this effort, Education Secretary Arne Duncan said:
"I think banks have had a sweet deal. They're a powerful lobbying force, and working-class families don't have lobbyists working for them. They're just trying to make ends meet and pay to go to college. And so you have strong, entrenched interests that have lobbied and continue to lobby to this day, and they're running ads in states. And you have, on the flip side, millions of working-class families trying to do the right thing and go to school."
In the lead on the lobbying effort has been Sallie Mae, a major student lender. Last month, Eric Lichtblau at The New York Times wrote:
At Sallie Mae, lobbyists for the firm are focusing on senators regarded as fiscal conservatives, as well as those in states that are home to lending centers with jobs at stake, including Florida, Illinois, Nebraska, New York and Pennsylvania, said John F. Remondi, chief financial officer for the company. ...
"We haven’t left any stone unturned — we’ll meet with anyone who will meet us," Mr. Remondi said in an interview. "We’re trying to identify at least 12 senators who would be helpful in this process."
They seem to have found a few helpful Senators under those stones. And those may be all who are needed to trip up passage of the House legislation in Senate because that is now part of the same budget reconciliation that the health care reform falls under. If a few Senators say their "aye" vote on health care depends on axing SAFRA, you can probably guess what will happen. And if SAFRA doesn't pass now, it will have to wait for next year's budget reconciliation.
In some ways, the most infuriating lobbyist claim in all this is that SAFRA will kill 35,000 jobs in the industry. It's bullshit. Only loan origination jobs will be lost, which is a relatively small number, while other jobs will increase because the Direct Loans will be serviced by the private loan industry. The benefit from this? The cost of each loan origination is less than $5. The federal government subsidizes private originations at $75 apiece. A tidy profit.
The legislation the industry seeks to kill would not push private lenders out of the business but rather create a public-private partnership founded on a competitive bidding process in which, as the National Student Association points out, the Department of Education would pick lenders "based on how well they serve borrowers, educate them financially, and prevent loan defaults. It will provide a role for non-profits to continue servicing student loans."
While the private lenders want desperately to eliminate this legislation altogether, lobbyists have been hard at work hoping at least to delay for one year the transition for all loans to come directly from the Direct Loan program. As Jane Hamsher has noted at FDL, this one-year delay will let the companies collect another $8.7 billion. Moreover, if the banks are lucky, the new Senate elected in November might decide to can the student loan legislation altogether. Over at FDL, where Jon Walker has been doing a bang-up job of covering the student loan issue, a Students Not Banks campaign has been launched to put pressure on Senators to get SAFRA passed.
For years, the student loan biz has been rife with rip-offs, screw-jobs, and as we found out not so long ago, corruption. For instance, The New York Times reported three years ago:
President Bush’s budget reports that in 2006 for every $100 lent by private lenders, the cost to the government of subsidies, defaults and other items was $13.81, while the same amount lent through the direct loan program cost the government $3.85. The battle for dominance in the loan market has escalated as tuitions have soared and students have borrowed more. This is the context for many of the payments to universities and financial aid officials that have come to light as a result of recent investigations into student loan practices.
The issue should be, as the President has said, a no-brainer. But that never guarantees anything in the Senate when the assholes are working their game. If successful, their opposition will kill legislation that would:
Invest $40 billion to increase the maximum annual Pell Grant Scholarship to $5,550 in 2010 and to $6,900 by 2019; invest $3 billion to bolster college access and completion programs; strengthen the Perkins Loan program, a campus-based program that provides low-cost federal loans to students by providing more reliable forms of credit from the federal government and expanding to include more college campuses; keep interest rates low on need-based federal student loans by making the interest rates variable beginning in 2012; make it easier for families to apply for financial aid by simplifying the FAFSA form; invest $2.55 billion in historically black colleges and universities and minority-serving institutions to provide support students need to stay in school and graduate; convert all new federal student lending to the stable, effective and cost-efficient Direct Loan program beginning July 1, 2010; provide all federal student loan borrowers with upgraded, modern, state-of-the-art customer service; create a new competitive grant program for community colleges to improve instruction, work with local employers, improve their student support services.
I'm sure that on the off-chance any of the seven Senators were to read my comments here they would take offense at being called assholes. But Bob Borosage at Campaign for America's Future puts my name-calling into perspective if this legislation should fail:
This will be the final obscenity: The bank lobby so strong and the Democrats so weak that even a "no-brainer" taking unearned subsidies from banks and giving them to poor kids can't pass.
Any of these Senators caring enough to avoid being labeled an asshole should stop acting like one.