Sallie Mae

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From Newsweek

Sensible Student Loan Reform Faces Problems in Congress, and Shows How Congress Is Broken

The trouble facing the administration's student-loan program provides more evidence of the almost unbelievable hypocrisy and short-sightedness and, yes, corruption of our Congress.

Most issues have two sides. This one truly only has one. The government can save $80 billion ending the subsidy to Sallie Mae and other lenders. These folks haven't assumed any of the risk for student loans for years—the loans are backed by the government. And there's zero evidence in a long series of hearings that the so-called counseling services provided by these private lenders decreases the student default rate, as hired- gun lobbyists like former deputy attorney general Jamie Gorelick know. So $80 billion—real money, even now—for Pell grants, student debt relief for strapped families, or loan forgiveness to help young Americans take part in public service might be lost because of the short-sightedness of people who claim to be public-spirited.

Gorelick, who was once mentioned as a possible attorney general, should be ashamed of herself for taking business that enriches her and her law firm at the expense of students and the future of the country they could help build if they got a college education. Should she have turned Sallie Mae's lobbying money down? Yup. She has done so plenty of times for other unworthy clients.

The college financial-aid officers are even worse. Caesar Storlazzi, chief financial aid officer at Yale, looked like a dope in the Times today by complaining that the administration was "shoving this down our throats." The comfort of these college deans with the normal way of doing business (including golf outings and the like with the private lenders) was trumping the needs of students, as Yale no doubt understood when it switched last year to the federal program.

The final villains of the tale are the almost comically hypocritical Republicans and conservative Democrats who apparently have no interest in saving the taxpayers $80 billion. They're keeping a low profile and not committing to opposition to direct lending until they've fully lined their pockets with the campaign contributions of the lobbyists. When the opponents do surface—the ones who would screw students for some campaign cash—some of us will be watching and calling them out.

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