The Republicans in Congress are about to cut $12.7 billion in federal funding from student loans and give the money to fancy people through more tax cuts. Rep. Jon Porter, R-Nev., is up to his eyeballs in the scheme.
Ostensibly, the private corporations that administer and profit from student loan programs, led by Sallie Mae (SLM Corp.), are crying foul over the budget cuts. And Porter's GOP betters on the House Education and Workforce Committee, such as chairman John Boehner and subcommittee chair Buck McKeon, are crowing about taking away some of the lenders' more obscene profits.
Boehner and McKeon's boasts would be justified if the money they were directing from private bottom lines would be herded to more student financial aid -- or even being used to make student loans less expensive. Instead, the billions are targeted to pay for more tax cuts for people who don't need tax cuts. And interest rates, fees and other charges on student loans are actually going up.
What's more, as syndicated columnist Froma Harrop wrote in a recent piece, Sallie Mae and the student loan industry are poised to benefit nicely from the legislation's "fine-print changes that will let lenders rake in more money than ever...
"For example, Boehner's legislation gives banks the power to stop certain borrowers from leaving their clutches and entering a federal program for people who can't earn enough money to pay off their loans. (They make money whether their captives pay or default.)
The Clinton administration started a program that provides loans directly to students, cutting out the private lenders. The Direct Student Loan Program is also cheaper for taxpayers. Boehner has written into the bill a subtle plan to kill it off: Move the administrative account for student loans out of the entitlement category and into a discretionary budget. That makes it easier for Congress to chop funding for the account. When that happens, the private lenders win in two ways: There's less money to oversee their activities, and the direct-lending program that competes with them is undermined."
Boehner reassured Sallie Mae and the other student loan bankers that when all was said and done, they need not worry. Harrop quoted Boehner telling a meeting of the Consumers Banking Association they should "Know that I have all of you in my trusted hands...I've got enough rabbits up my sleeve."
The ranking Democrat on the Education and the Workforce Committee, Rep. George Miller of California, calls the bill "the largest raid on student aid in history." According to Miller, 70 percent of the so-called savings which Republicans claim will reduce the deficit, but will actually be eaten up by offering more tax cuts to the rich, are achieved by continuing to charge students and parents excessive rates for student loans.
Last summer, as plans to gut the federal student aid program were emerging in earnest, the Chronicle of Higher Education connected the scheme with enormous financial contributions from the student loan industry -- $136,000 from lenders to Boehner, and $175,000 to McKeon.
The CHE report also found that the top five recipients of student lending industry money among Republicans on the House Education Committee included none other than one Jon Porter. The Nevada Republican received $12,500 from the lending industry during the 2004 cycle.
According to FEC reports, Porter has also received $20,000 from the 21st Century PAC -- McKoen's leadership PAC, over the last three cycles, and $24,000 from Boehner's leadership PAC, the Freedom Project. That's one way to enforce committee discipline.
In addition to backing the plan to gut student aid while shielding the student aid industry, Porter of course is backing Boehner to replace Tom DeLay as House Majority Leader (a bit surprising, that, inasmuch as Boenher refuses to return contributions from Jack Abramoff's clients, and we all know how sincerely Porter feels about that issue -- but that's another post).
"As parents across Southern Nevada face the skyrocketing costs associated with higher education, they are constantly looking for ways to help ease the financial burden," Porter said recently while announcing an event on higher education funding in Southern Nevada.
That's one measure of the congressman's commitment to working on behalf of students, and not the student loan industry. Here's another: When John Boehner, Porter's champion for House leader and a man who clearly is emerging as a mentor to Porter, said "Know that I have all of you in my trusted hands," he wasn't talking to students and parents. He was talking to the corporate, for-profit student loan industry.
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