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Sallie Mae's Influence Peddling

Anyone who thinks that getting legislation through Congress this fall that would eliminate the Federal Family Education Loan (FFEL) program is going to be a cakewalk needs to read this informative article from the Huffington Post. The piece provides the most comprehensive picture to date of how Sallie Mae has used the fortune it has amassed from making federally backed student loans to try to persuade Congressional Democrats to oppose President Obama's call for a full-scale conversion to the federal Direct Lending program.

For years, Sallie Mae had tilted its political contributions and lobbying efforts toward Republicans. According to a recent report published by the Center for Responsive Politics, "Since 1989, political action committees and employees affiliated with Sallie Mae have poured $6.3 million into the war chests of federal candidates and party committees." More than 60 percent of these contributions have gone to Republicans, with the largest recipients by far being Reps. John Boehner of Ohio and Howard P. (Buck) McKeon, both of whom led a key House committee in charge of student loan policy. Meanwhile, Sallie Mae also contributed $250,000 to President Bush's 2005 inaugural committee, the report states.

But as soon as Democrats won control of Congress in 2006, the company realized that it had to reverse course. As we've previously reported, Sallie Mae outlined its plans to "grow" a "pro-FFELP coalition within the Democratic party" in an internal strategy document it produced soon after the election. In the document, which was obtained by Rep. George Miller (D-CA) and published on Higher Ed Watch, the student loan giant said that it would target its campaign contributions to "Blue Dog and Financial Services Democrats," as well as members of the Congressional Black and Hispanic Caucuses.

Sallie Mae has lived up to its word. According to the Huffington Post, through its Political Action Committee (PAC) the loan company provided $145,000 during the 2008 election cycle to the individual campaign committees of Blue Dogs and Democratic members of the House Financial Services Committee. The corporation also provided an additional $10,000 to the Blue Dog Democrats' PAC.

In addition, at Higher Ed Watch, we have found that Sallie Mae's PAC donated $89,000 to members of the Congressional Black and Hispanic Caucuses during the 2008 election cycle, with two-thirds of the contributions going to members of the black caucus. We also found that Sallie Mae made total contributions of between $60,000 and $100,000 to the Congressional Black Caucus Foundation in 2006 and 2007 (see here [p.22] and here [p. 22]).

At the same time, according to the Huffington Post, the loan company has assembled a dream team of high-powered Democratic lobbyists to help it maintain its prominent position in the federal student loan program. The group is headed up by Tony Podesta, "a legendary Democratic fundraiser whose brother headed the Obama transition team," and Jamie Gorelick, the former deputy attorney general in the Clinton administration.

Also on the team are Paul Brathwaite, the former executive director of the Congressional Black Caucus; former top aides to Senators Barbara Boxer (CA), Byron Dorgan (ND), Richard Durbin (IL), and Charles Schumer (NY); as well as to House Speaker Nancy Pelosi, and Reps. Edward Markey (MA), David Scott (GA), and Tim Walz (MN).

So far, Sallie Mae has had little success in the House, where the Education and Labor Committee approved its version of the student loan reform bill in July. The legislation is expected to come up for a vote on the House floor in early September -- and despite defections from Blue Dog and Financial Services Democrats, it is expected to pass fairly easily. The real battleground is going to be in the Senate, which plans on taking up the student-loan reform legislation late next month. Already, at least a handful of Senate Democrats have expressed strong reservations, and in some cases outright opposition, to the President's proposal.

In recent weeks, Sallie Mae has expressed optimism about its prospects in promoting an alternative plan to Obama's, confidently telling financial aid administrators (as Tim Ranzetta of Student Lending Analytics recently pointed out) that "the legislative process is far from over."

At Higher Ed Watch, we would hope lawmakers who were recipients of Sallie Mae's largesse will not let the money and influence peddling cloud their better judgment. After all, Sallie Mae's lobbying prowess shows just what's wrong with the current system -- lenders collect taxpayer funded subsidies on government-backed loans with no financial risk and then recycle some of the earnings back to friends on Capitol Hill to keep the whole scheme going. It's high time to stop this vicious cycle that is wasting billions of taxpayer dollars each year.


Can Not End the Failed Public-Private Partnership Soon Enough

This analysis of financial contributions from the private industry is consistent for any industry subject to congressional action. To anyone serious about getting private corporate contributions out of congressional campaign coffers, one must first get serious about reversing congressional interference in private business.

On the issue of benefits that private lenders supposedly gain from the federal student loan program, they are actually the federally imposed costs that caused private capital to flee the student loan marketplace, when the Pelosi Congress essentially reversed private borrower benefit programs and mandated new prices. Subsidies are provided by government in exchange for price controls. Guarantees are provided by government in exchange for public control of credit policies and business practices.

Ironically, at a time of a demographic wave increasing demand for education financing and unsustainably high federal borrowing, it appears to be the judgment of the Pelosi Congress that students should be denied access to private capital while competing with every other federal programs for what will become constrained federal borrowing.

Regarding the current legislation, I say kill FFELP as soon as possible to free private industry from the chains of subsidy and guarantees, and the parasitic congressional revisions that drain the capital of private entities to fund other federal programs. It is time to start working on private education finance solutions, which will succeed the financial collapse of the federal schemes.

Sallie Mae Exploiting students.

"After all, Sallie Mae's lobbying prowess shows just what's wrong with the current system -- lenders collect taxpayer funded subsidies on government-backed loans with no financial risk and then recycle some of the earnings back to friends on Capitol Hill to keep the whole scheme going."

And just where do you thing SM got that money? From students! Espically those who find themselves in default! The money being extorted from students in the name of Student Loan fiancial services is a crime! And Sallie Mae is dead first in the heat to ensure that their gravy train will never end..

Well, I have news for you. It is about to come crashing down. As this economy continues to grow bad, and more and more students are graduating with NO job prospects in any reasonable future, the default rates are going to sky rocket just like they did in the late 1980's. Then congress can start the whole investigation stuff all over again.

I wonder if the congress will finaly understand that its greedy parasites like Sallie Mae that has ruined higher education and the hopes of current and future generations.

The Federal government has

The Federal government has no business in financing private education at all. The problem is simple, the belief that all people have the right to an education. This is simply not true. Private education is a privilege of those who can afford it. Personal education does not need money, it only needs opportunity and experience. The fact that we have a system in which the feds guarantee student loans is a symptom of the problem. A problem of entitlement. I should have never gone to college, I could not afford that privilege. As a result, American taxpayers like myself are paying on the loans through income tax and other forms of government subsidies, ie guarantees.

All this being said, the first step to fixing the problem is to remove private firms from profiteering of the debt incurred through education. This is nothing short of indentured servitude.

The next Step is to require all secondary education institutions to publish their student loan default history. They need to also require schools to collect data on graduates and the corresponding income of the graduates post education.

After all this, the federal government should remove themselves from the lending business and relinquish the responsibilities back to the States of the blessed union. States should be the ones who have to bare the burden of guaranteeing student debt. They are the ones who have to accredit institutions within their borders. They currently do this on the behalf of the dept of education. There seems to be little if any oversight to qualify whether an institution should be eligible for federal funding. Other than the states approving the accreditation process or not. There is virtually no federal oversight to determine if the states are looking out for the best interest of the federal tax payer. Why should they? This amounts to a new form of subsidies from the fed to the states with the most lucrative educational system.

Finally, after the states have been tasked with the responsibilities to both guarantee the loan while also accrediting the educational institution, federal bankruptcy consumer protections should be restored to student debts.

Stimulate the economy. Restore consumer protections to student debt. Forgive and forget federal guaranteed student debt. Send the issue of education back to the states. Empower people through their states.

Thank you for the forum.

Restore Consumer Protections

The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with congressionally sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation's history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system that has resulted promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting system promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately, promotes delinquency and default.

While this system has been extremely lucrative for a few individuals, it causes massive harm not only to borrowers and their families, but also to non-borrowing students and their families, due to the dramatic inflation that the system promotes. The nation suffers a massive cost due to the large amount of wealth trapped in this system, the quality of the education received by the citizens, and the public's opportunity cost associated with the materialistic career paths that citizens are forced into at the expense of public interest work, and entrepreneurship.

Importantly: this problem exists across both Direct Loan (DL), and Federal Family Education Loan (FFEL) Programs. In the public interest, the consumer protections that were removed by Congress must be restored by Congress at the earliest opportunity. By returning these consumer protections, the motivations of the system's functional elements will be reoriented such that most, if not all of the deficiencies mentioned above will go away over time.

Looking for Government inability to run things

Look at the cash for clunkers program....

1. Run out of money in 1 week
2. Crashed Government computers
3. Tons of paperwork

This is a big smoke screen, once FFELP disappears and colleges are riding high, then Congress will start legislating conditions to use Direct Lending....

Cash for clunkers shows resourcefulness and fast action

which could not occur in the private sector. Could you imagine company A calling company B and saying "I need a new customer service and financial system, ASAP"? It would take months, if not years, for coding, unit testing, systems testing, integrating testing, acceptance testing, staffing, training, and so on. Yet the government is expected to have something up and rolling, with no bugs, in only weeks? LOL!

Even if a COTS (commercial off-the-shelf) product were readily available, it would have taken a lot longer to implement than cash for clunkers. In addition, FFELP is just as "governmenty" as direct lending, and there is no transparency. If you think cash for clunkers is a huge failure, then how does that bode for FFELP, which is chock full of state and local government clunkers participating?

Milton Friedman RIP, eat your heart out!

Nancy Pelosi, speaking on Al Hunt’s Political Capital said the following:

“I believe that a robust public option is the way to keep the insurance companies honest. To increase competition, and to improve health care, reduce cost, expand choice for the American people.”

It’s wonderful to see Nancy Pelosi picking up where Milton Friedman RIP left off as the new champion of competitive economics. But it begs the question (still unanswered by the scholars at the NAF), why no competition for student loans? As Nancy stated, competition improves quality, reduces cost, and expands choice for the American people. These are laudable goals are they not NAF? And, in the case of student loans, the academics at the CBO tell us they come in at the bargain-basement price of $47 billion dollars (or is it $87 billion, or $94 billion--I’ve lost track) as compared to $1.6 trillion for the “competition-creating legislation” for health care known as the “public option”. Why the disparity in treatment here NAF? If Congress is ready to spend $1.6 trillion for health-care competition, why not spend a mere $47 billion (or whatever) for competition for student loans? Unlock the secrets of our Washington benefactors for us NAF, as only you can!

US Citizens Must Be Educated to Compete

Darren, we're in a global economy now. We aren't competing very well anymore. The number of geniuses born in China is more than the number of school age children in America, and will increase. Manufacturing jobs moved overseas, so we can't even compete with China even on an uneducated level. We are bad at giving AND receiving service, so we aren't competitive in that area either. The financial products have driven our economy and that blew up last year. Because student loan borrowers are so mired in debt, they can't afford to create jobs without further loans. Again, refer back to the freeze on credit earlier this year. And who needs a business loan to worry about on top of a school loan, and for some, a credit card and a mortgage?

NAF has already provided a history of student loans, but I will summarize it here to make this point: what we know for sure after a century of student loans is that we need fully educated people in our workforce to provide top rate economic competition around the world in this global economy. States cannot make that happen on their own. Nor should Sallie Mae or bankers get in the way of making that happen. And if we are to revive the student aid program, we must do so in the spirit of the original policy behind its creation, as explained below.

Thomas Jefferson believed widespread access to education based on “merit and ability” was instrumental to democracy. In 1840, Harvard University established a student loan program. In the 1930s, Indiana tested students and provided free higher education to those who passed. That state's financial aid program was well run in the 1940s. And that's when the baby boom occurred. The U.S. government decided to find ways to educate those babies. Our government recognized the long term effect of a baby boom on the economy. So, Darren, almost 100 years ago, we determined that states could no longer handle educating our young on their own because of the limited resources of many states.

The U.S. government began to aid the pursuit of higher education when the Russians excelled in their space program in the 1950s. Our great President decided not only to compete, but to pass the Russians. We decided to educate and train our people to create similar space programs. We realized then that education was necessary for national defense because we knew many lucrative innovations would come from a space program. So, consumer loans were extended to cover education. Students who couldn't afford college before could now attend. Brilliant Americans, it turned out, usually weren't born with a silver spoon. We competed with the Russians and won.

At the end of the 1950s, the U.S. government passed the National Defense Education Act to stimulate public and private education. We needed the U.S. government to act then (and even more so now) because states (still) cannot handle this national burden own their own. Subsequently, the U.S. government launched further programs that included loans, work study, and grants--all of which were administered on college campuses. The U.S. Department of Education provided the funds for all of these programs. In 1965, the U.S. government established loan guarantees for bankers and Pell Grants for students (evolved from the Basic Economic Opportunity Grants). Clearly, during this period America could still think outside of the box.

By the early 1980s, just after Ronald Reagan became president and throughout Reagan's presidency, the aid programs declined. The Reagan administration changed the programs so that even people who did not need financial aid could receive it by based on Reagan's equal opportunity argument. Because of legislation based on Reagan's argument, the cost of college began to rise significantly, as predicted, and has continued to rise significantly ever since. His administration also reduced federal aid to students to reduce off-budget borrowing because the GSL program increased the most of all the aid programs. Ironically, as predicted, this caused the U.S. to shift towards loan spending because it increased the need for higher family contributions. So, to receive an even higher education, the U.S. government had to allow students to get more loans on top of the ones they already had. That's when ordinary Americans first found themselves overleveraged from trying to get an education. The Reagan Administration rewarded their ambition by enacting the Student Loan Consolidation and Technical Amendments Act, arguing that this would remove stress and allow for concentration on studies. But the cost of education continued to rise significantly, so an even greater scope of students than originally planned by the U.S. government in the 1940s needed to get loans. Essentially, the "war on the middle class" began with Reagan's budget cuts during his first 100 days.

Then, in the early 1990s, after Bush #1 replaced Reagan, all students from every income level were allowed to get the federally guaranteed student loans, instead of just those originally planned by the U.S. government in the 1940s who needed to get loans. Also, the U.S. government created loans provided directly from the U.S. government (taxpayers).

When Clinton replaced Bush #1 four years later, he preferred the loans made directly from the U.S. government because they were significantly less costly on the national balance sheet and therefore helped balance the U.S. budget. However, in the mid-1990s, the Republican Congress toyed with getting rid of the Direct Loan program altogether. Instead, they muzzled the U.S. government so that only banks and other types of private student loan lenders could market their products. Clinton went along with it, even though it wasn't his own economic special recipe. Then, as Sallie Mae is doing now, those bankers and private lenders used money and favors to get Congress and the Department of Education to do what they wanted. This included making people have to repay student loans for the rest of their lives and allowing the Department of Education to collect on the loans without a court order, a result of the fallout from discovering that 25 doctors at Harvard's Medical School were delinquent on their student loans in the early 1980s.

But, under Bush #2, in the last part of the first decade of this new century, even the bankers became overleveraged, so the U.S. government had to step in and make student loans with taxpayer money again, just as it does under the Direct Loan program. That's when Bush #2 enacted a program to buy back guaranteed student loans from the bankers, temporarily. Sallie Mae is selling them to the U.S. government as you are reading this.

Now, after Obama replaced Bush #2, the U.S. government is preparing to move solely to loans provided directly from the U.S., just as Canada did at the turn of this century. Canada's federal and private loans became integrated so that their borrowers only have to write one check and send it to one place.

The moral of this story is that in the 1980s, we shouldn't have listened to Reagan. In the 1990s, when we should have reversed Reagan's legislation, Bush #1 furthered it instead. That's where we went so terribly wrong. Now we have people in debt for life because they went to school, with loans they will never be able to repay, in a cash poor economy that can't help them innovate and create jobs for themselves or others. Right now, the Chinese have won. We have to hit the RESET button. Where we begin after that seems to be a difficult question for some, but it isn't really, unless you're greedy. First restore consumer protections. Stop aid to people who can afford to pay. Close the gap between U.S. student loan and grant spending. Maximize the use of work-study so that we can recreate entrepreneurial opportunities and endeavors. Use the web to create a micro-loan program. By starting there, we will reduce the complexity to something more workable, clearer, and more manageable.

Fed vs States, Self verus entitlement

Globalization maybe where we are at. This may indeed be true, but this does not mean it is the correct place to be. I recognize that a global economy is present, I also recognize that this globalization is being used as a tactic to suppress individual responsibilities and rights. I believe that the buy local, act local, think local mantra maybe a more correct path. Goods should be produced locally to keep the proximate economy strong. Global goods should only be obtained when localized producers can not keep up with demand. I believe most globalist would argue that is why the jobs/production left the local economy in the first place. Second, to maintain the local mantra is reduce the effects of production on the environment. Many companies left local markets because they could go to unregulated areas of the world and use the even grander poverty present in those areas to their benefits. Just look at the free-trade zones of the Philippines or China. So to be very clear, globalization maybe here, but to even suggest it is the correct place to be is just wrong - morally, politicly, and environmentally (perhaps even economically).

When it comes to education, I have met many smart people, productive people who have less than a high school education. This is not to say these people had cushion jobs, they worked very hard. So lets be clear here, hard work often times has more value than education. Now when I speak of education, I speak of formalized conventional education. What good does an MBA do for someone who needs to dig ditches? The person digging the ditch has no need for an MBA, not to complete the ditch. Now, I am not here to condemn people to a life of ditch digging jobs, but it has to be recognized that we will always need ditches dug (you can substitute any manual labor job here.) The belief that education is an entitlement is the part that I maintain my argument against. Your retort even suggest this. Education should be based upon merit and ability.

Thomas Jefferson maybe my favorite forefather. He is the founder of the University of Virginia. He was also completely buried in debt when he died. Furthermore, I agree with Jefferson in that an ignorant man can not protect his liberties. So again, what kind of education are we speaking of? Primary education was his emphasis in order to bring forth a better educated union. Teach students to education themselves and the rest will take care of itself. Willfully ignorant people can not be made to be educated, they will only do what they have to in order to move forward.

As far as the 1940’s go, the people of this country believed in different things than the people of today. Our country has become stifled with the belief of federal funded entitlements. Education was and should continue to be a local responsibility, at least primary education. One of the unforeseen consequences of the Brown vs Board of Education was that Americans all over the country will have become dumbed down. I am not saying that I believe one group of people over another group of people should be given a better education based on race. I am saying that as a result of the systemic desegregation, and as a result the dilution of states rights, we have seen a decline of performance within states education systems. The federal government used its control of federal funds to exert its will upon the states. I believe in Universal Suffrage, but I also believe States should have control over the education of their respective citizens. The U.S.o.A is based upon the assumption that all men are created equal, even if the writers of that document did not believe certain classes of men to fit into that category. All of this acknowledges that the removal of a states responsibility to educate their citizens requires a government which is far over-reaching its original intent. Please take a look at the tenth amendment.

My belief that the Federal government has penetrated to far into everybody's life aside, the fact that the Dept. of Education task states to validate eligibility of funds is sad. The states have nothing to lose if someone is not qualified to receive the funding, in fact it is in the states interest to have the ineligible get funds to go to learning institutions in their borders. They are responsible for the accreditation of eligible learning institutions. This is more money in circulation in the states economy. There is no liability for the state. This is why I point to the need to have the states guarantee the loans. If the Federal Govt. wants to back those loans up that is their business. I personally believe that the poor states will do just fine, they will be a source of manual labor. The rich states would have more educated people. Personally I am fine with that.

The people who are of “merit and ability” would still get their formal education. This Country is in need of farms and trades. Trades can be learned through apprenticeship programs like they have been done for centuries. Farming techniques can be improved with formal education, but the true knowledge come from the old farmer who has been doing it his whole life.

I am not a luddite either, I believe technology can improve the quality of life. I understand that the people who design said technology have very expensive educations. I also believe that not all people can or should be doctors, attorneys, MBA’s, or engineers. If the federal government was truly concerned about the education of its states populations it would reward graduates with a free education. Penalize the ones who took the money and didn’t finish.

As far as the rest of your comments go, I tend to agree with it. I appreciate your healthy well-informed debate.

Please take time and read a document out there called “A Histroy of Debt in America”

Education Is Now a Federal Responsibility

After we blew up the world economy last year because of our financial products, we had to commit to remaining in a global economy. It sounds like you bought into Reagan's dream of heroic adherence to free enterprise. No society in history ever survived that way. So the wonderful dream of beautiful farmland with fat healthy crops, large handsome families, multi-generational houses, inventors with adequate healthcare patiently tinkering in their barns and garages with exciting new ideas, brilliant students in pristine modern classrooms having their minds filled with all the knowledge we've gained over the centuries, our military packed full of patriotic young men with bulging muscles, middle class wages that just keep growing, the doctor stopping by to check on little Sally's head cold and give her the rose he plucked and hid from a bee (the bees are still missing) ended.

I assume that your term "dumbed down" means you are complaining that there is a simplification of culture, education, and thought, a decline in creativity and innovation, a degradation of artistic, cultural, and intellectual standards (Wikipedia). My world is surrounded by ravenously creative and innovative people. They are excited, productive, and all highly educated because of student loans. But as entrepreneurs, all they see is struggle and debt ahead and I think that's why you think we're not getting much bang for our federal educational bucks. Plus, the television news is taking a dumbed down approach to reporting, so that might also be where you're getting that impression.

I think it's too late to be unhappy about federal intereference. If you're like most Americans, your typical day is protected by the federal government all day long (with minimal assistance from the states) and you have no serious complaint about that. You're awakened by an alarm clock powered by electricity generated by the public power monopoly regulated by the U.S. Department of Energy. You shower in clean water provided by a municipal water utility. You brush your teeth with toothpaste and possibly take a pill, both made safe by the U.S. Food and Drug Administration. You turn on one of the FCC-regulated channels to see what the National Weather Service of the National Oceanographic and Atmospheric Administration determined the weather was going to be like, using satellites designed, built, and launched by the National Aeronautics and Space Administration. You eat a breakfast inspected by the U.S. Department of Agriculture. You check the time, which is regulated by the U.S. Congress and kept accurate by the National Institute of Standards and Technology and the U.S. Naval Observatory. Then you get into a car you expect to be safe because of the National Highway Traffic Safety Administration. You drive on safe, and mostly smooth, roads and bridges built by the local, state, and federal Departments of Transportation. This week or last week, you stopped to buy gas with as few toxins as the Environmental Protection Agency could regulate and used legal tender issued by the Federal Reserve Bank (so you didn't have to carry your prize pig in your back seat and hand it over). You expected your wife to pick up the mail conveniently put into your box and protected by the U.S. Postal Service. She also promised to drop the kids off at the public school to receive as much of the knowledge that we gained over thousands of years as possible. Meanwhile, at work, you felt safe from being hurt, harmed or endangered because of workplace regulations imposed by the Department of Labor and the Occupational Safety and Health administration. Then you returned home from work to a house that did not burn down, flood, or explode because of state and local building codes and the Fire Marshall's inspection. You also fully expected to see all your furniture and valuables still inside because of your local police department and the FBI. Clearly, on August 11, 2009 at 2:57 pm, you logged on to the Internet to write your blog post, which was developed by the Defense Advanced Research Projects Administration. [I borrowed most of these details from a NY Times blogger.]

So, I ask you, exactly how much are you suffering from federal involvement in your life? I just want to revive the Student Aid Program and make it a beacon for all other student aid programs around the world (lead, not follow).

We have committed to a global economy with everything and all that we have. Now America has to be very careful to avoid working doggedly hard on the wrong thing and thereby wasting precious resources. I'm excited about the future that springs from this Age of Information. I'm excited about what our children can accomplish if they learn from our mistakes. So, on the subject of student loans, it's time for Congress to admit and learn from the mistakes that were made based on economic hypotheses that didn't pan out. It was not a mistake to help fund education in America. That's how we became No. 1 in the world, and thereby the safest country in the world. We learned to throw all the students into our schools and let the cream rise to the top. It takes time and numerous techniques to expose hidden helpful talents. The Computer Age taught us that we don't know what the jobs of the future will entail, so we can't train our children for them because our children will be creating them after they learn from us. And that's why students shouldn't be made bankrupt for life just because they went to school.

Here is to a Healthy Debate

Belinda, I believe you have misunderstood my rant. While i am very much concerned about where we are, I do believe many in many of things you say. I too wish to have an educated population, we only disagree on how. I too believe that funding should be available for those with ability and merit, I, again agreeing with you, believe those borrowers should not be strapped with insurmountable debt for their entire lives. I agree that many of the federal agencies you have named have been mandated with admirable task, I am not so convinced that they have been equipped with the funding to do said task. I believe that while the larger business interest in this country have thrown themselves all-in into globalization economy, I do not think this was done because the best interest of American and it's constituent states (and the people of said states.)

European inspired expansion franchised through our country has led to a world of Imperial-Commerce. We have definitely found ourselves at the front of the pack leading the world into a future of promised endless expansion. Wealth accumulation is not inherently evil. Profit is not either. Perpetuating the belief that we are free, when many of us are swimming in debt however, is evil. While i believe education can awaken ones awareness and potentially provide the tools to overcome such oppressions, I do not believe the education system of our country is aimed at that. While you may have many intelligent and possibly successful friends, the purpose of our education system has been to breed consumers. Debt is the shackles. Education is one of the weapons of control. Creativity being inspired by the educational system was not what I was offered while I went through it.

Our education system should teach people how to teach themselves, regardless of who is paying for it. Higher education should be a reward given to those who achieve it, not a burden like it has become for so many.

As far as your assumption about the aforementioned federal agencies providing for me. I am a homeless working person. I provide many things for myself. I do not take drugs and steer clear of the guarantees of the FDA. The EPA is a weapon used by one industry against another. The internet is a wonderful thing that has the potential for people to take their educations into their own hands. I have a college degree, one that was guaranteed by the DOE. I have a diploma that wasnt worth the paper it was printed on. The School provided a DOE sanctioned education for jobs that no longer existed. I see little poiunt nit-picking the entire family of federal government programs.

Cheers and I appreciate the informed debate,


The universal declaration of

The universal declaration of human rights includes education, so yes, the federal government should do it's job to guarantee a college education to all qualified people in this country (and yes, since most colleges are public colleges, they aren't providing "private" educations - it is public, providing a public service), and, further, to make sure that those who don't get one can still have living wage jobs.

When there were no private student loans, when tuition costs were low, grants, scholarships, and other aid paid for most people to attend college, in the 60's and 70's, things were working very well. When student loans, at that time, had standard consumer protections attached to them, they the system was healthy and functional. No, indeed, it was only when private, for-profit industry came into the picture that costs soared, when defaults became rampant, when financial aid staff was corrupted by private lenders, when some people made billions while students suffered, floundered, and and bottomed out with no recourse.

Just like on wall street private free market fundamentalist businessmen gambled away the houses, savings, and jobs of millions of people, so did Sallie Mae and similar private corporations breed an unhealthy, chained system that has negatively affected the lives of countless regular people. Clearly, the government model has worked better, and we need to go back to it.

Student loans-Fraud schemes

My daughter is in her senior year in high school and I am trying to learn as much about the various mechanisms available to finance her education as I can. I was really stunned to read about all the problems with student loans and how Congress has given the banks and loan guaranty organizations a free ticket to extract as much money from students as possible.

Some of the actions of our government include making student loans the only loans available that cannot be discharged through bankruptcy, allowing the loan companies and guarantee companies to own the collection agencies, which provides to them an incentive to allow (and push) the student to default, being able to attach Social Security retirement and disability income for repayment, allowing interest rates to be as high as 29.9% and a host of other goodies.

IMMEDIATE ACTION NEEDED - Sallie Mae mounting opposition to our

I just blogged about this Sallie Mae ad campaign. I'm a promotional writer and marketer for Robert Applebaum's Forgive Student Loan Debt movement, and I wrote an email to Sallie Mae and posted it to my blog. Here's what I wrote:

Dear (Clever) Sallie Mae Marketers:

Wow, this new pitch is quite clever. However, it doesn't have me fooled. Here's my hunch too - I betcha there are thousands and thousands of others who aren't buying it. But I gotta hand it to you. Creating class conflict between your Delawarian employees (who probably make terrible wages) and us is quite smart!

Oh, and please allow me to introduce myself. My name is Ms. C. Cryn Johannsen, and I am a promotional writer and marketer for Mr. Applebaum's Forgive Student Loan Debt movement. (And so you are aware, our movement on Facebook is nearing 227,00 members!). I am also a blogger and am uncovering many stories about the corrupted and broken lending industry to which you obviously belong.

Today, I'm carrying out my own media campaign. Let's call it: contra Sallie Mae.

I've corrected your ad and let everyone know that it really should read: "Save low-paying SALLIE MAE jobs." I find it hard to understand that you feign to care so much about Delawarians. Is that really true? After all, when there wasn't any pressure on the student lending industry, Sallie Mae gladly sent jobs off-shore to India and the Philippines - that way, those already low-paying jobs in the U.S. got even lower. Bravo (Crickets chirping). Based upon your interest in making oodles of money for your company, you were smart in doing just that. But now that there's push for change and a new administration in office who takes issue with welfare subsidies to companies like your own, you're pulling out all the stops. I understand you're creating 2,000 jobs here in the good ol' U.S. of A.

I have news for you: people don't want call center jobs!

They deserve, instead, access to affordable higher education. Your industry has found a gold mine (bilking students), and as a result you have created a new class - the indentured educated class. But many of us refuse to believe that we are indentured servants. (After all, we did go to school and learned a few things).

Our movement represents a bright light of hope in a dark sewer of hell that you're company created. Our movement is based upon truth and transparency, and those are things Sallie Mae doesn't get. You, my friends, are the villains in this tale. Many, many people across this country are realizing that too. It's not a good time to have a dubious record - and your company certainly does. As you know, Americans are pretty tired of companies like Sallie Mae reaping all the benefits.

I look forward to spreading the truth about your company's mission.


Ms. C. Cryn Johannsen

Oh, NOW Sallie Mae is concerned about their employees.. .


I find it appalling that Sallie Mae's argument against ceasing the practice of economically raping an entire generation of people who only wanted to better themselves through edu...cation rests on the danger it would pose to their own employees. What makes Sallie Mae any different than Lehmann Brothers, Bear Stearns, Enron or any other company whose own practices lead to their demise? Moreover, where was Sallie Mae's concern for its employees when it outsourced thousands of jobs to India in years past? This is hypocrisy at its finest! This is all about Albert Lord and the rest of the executives at Sallie Mae's fears that they'll have to forgo buying that extra ivory back-scratcher or second Bentley this year, nothing more!

Direct lending

Indirect lenders are not the cause of the high costs of higher education. They are a symptom of problems of high costs in the educational industry, and education is an industry, that has driven students to borrow more and more money to meet the costs of higher education.

I would rather suggest that students and schools start looking at themselves to find who is the cause of higher education costs. Students today expect colleges to offer amenities like they are working adults and colleges spend money on faculty, administrators and infrastructure like they have no budget controls. President Obama, for the most part, is playing to a political constituency--namely, students--to win votes.

Ironically, what students don't realize is that the same servicers, like Sallie Mae, that they are griping about now for high costs and poor service, will be their servicers under direct lending. The only difference will be that the government will try to lower servicing costs even more with bigger loan volume contracts at lower fees that will strangle the big servicers even further to the point that all jobs in this industry will be overseas. If students think that is good service and helps our economy still struggling with jobs, I would be very surprised.I also think that for the government to use servicers in direct lending that it ranted and raved about to over turn indirect lending is embarrassingly hypocritical.

By the way, why didn't the government take over the banking industry, the mortgage industry, or the automobile industry, the way it is electing to do so with the student loan industry. These other industries did far greater damage to our economy than the student loan industry did; yet this industry is paying a far greater price. By the way, I don't work in the student loan industry.