Private lenders focus on jobs in student loan fight

Private lenders focus on jobs in student loan fight

Private lenders are focusing on jobs in their effort to sway centrist Senate Democrats from supporting an overhaul of student loans.

Sallie Mae, the largest lender with 8,500 employees and 26 locations, argues the Student Aid and Fiscal Responsibility Act (SAFRA) approved by the House would cost the economy 35,000 jobs. Such an argument could resonate as lawmakers grow increasingly focused on jobs and worried about the nation’s unemployment rate, which is now greater than 10 percent.

Time also may be working in favor of the private lenders, particularly with healthcare reform delaying the Senate. Universities and colleges are set to send their financial aid packages for the new school year to prospective students in February and March, leaving little time to install a new system.

A key moment could take place this week when financial aid officers attend a Federal Student Aid conference in Nashville. Education Secretary Arne DuncanArne Starkey DuncanTrump administration is putting profits over students Chicago to make future plans a graduation requirement: report Top Education official resigned over dispute with DeVos: report MORE is set to give the keynote address.

Private lenders such as Sallie Mae and Nelnet would no longer be able to originate federally backed loans under legislation approved by the House and supported by President Barack ObamaBarack Hussein ObamaOvernight Energy: Dems ask Pruitt to justify first-class travel | Obama EPA chief says reg rollback won't stand | Ex-adviser expects Trump to eventually rejoin Paris accord Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand Ex-US ambassador: Mueller is the one who is tough on Russia MORE, though the companies could still service federal loans. Obama argues the legislation would save the nation $87 billion over 10 years by cutting subsidies to private lenders.

Kevin Bruns, executive director of America’s Student Loan Providers, says if passed, the overhaul will force 4,000 schools to change to direct lending in June 2010, hardly in time for the 2010 academic year. “We oppose the bill and we stand for an alternative program that would achieve what the president wants to achieve without the downsides,” said Bruns.

Ads purchased by the student lender show the faces of employees at Sallie Mae, along with their responsibilities at the company. “Congress, my job is worth saving,” is the message spelled out by the ads.

Sallie Mae has organized petition drives in five states to raise support for rival legislation. It also has met with several key centrist Democrats, including Sen. Evan Bayh (Ind.), who was presented with a petition signed by 186,092 people. That petition said the House bill would reduce jobs and called for private companies to be able to continue to originate loans. About 80,000 of those who signed the petition are from Indiana.

If the House legislation is approved, Sallie Mae would cut its payroll of 8,500 employees by 30 percent or 2,700, according to Martha Holler, a company spokeswoman.

“We continue to support alternative legislation that generates $87 billion of taxpayer saving that can be delivered tomorrow with no transition risk and with job growth, not the significant job losses inherent in the administration’s proposal,” Albert L. Lord, vice chairman and CEO of Sallie Mae, said in a recent statement.

Sen. Ben Nelson (D) of Nebraska, which is also Nelnet’s home state, has joined Sen. Mike EnziMichael (Mike) Bradley EnziThe 14 GOP senators who voted against Trump’s immigration framework Mulvaney remarks on Trump budget plan spark confusion Overnight Finance: Breaking down Trump's budget | White House finally releases infrastructure plan | Why it faces a tough road ahead | GOP, Dems feud over tax-cut aftermath | Markets rebound MORE (R-Wyo.), ranking member of the Health, Education, Labor and Pensions (HELP) Committee, and other Senate Republicans in sponsoring legislation to extend the present system for another year. Nelson is the only Democratic co-sponsor of the legislation.

The Senate HELP Committee hopes to draft a version of the House bill by Christmas, and it’s possible that bill could receive a floor vote early next year.

A research note published in November by FBR Capital Markets analyst Matt Snowling and first reported by Dow Jones said the Obama-backed legislation would be several votes short of passage in the Senate.

Snowling’s research note predicted that the overhaul would have to be put off by a year because of healthcare reform. He suggested this could give Sallie Mae and Nelnet more time to sell Congress on their alternative proposal.

Sen. Tom HarkinThomas (Tom) Richard HarkinTrump should require federal contractors to follow the law Orrin Hatch, ‘a tough old bird,’ got a lot done in the Senate Democrats are all talk when it comes to DC statehood MORE (D-Iowa), the chairman of the HELP panel, has said he’ll use special budget reconciliation rules so that only 51 Senate votes would be needed to win procedural motions on the bill.

But that could cost him support from some of the centrists he’s trying to win over. Democrats such as Sen. Kent Conrad (N.D.), the Budget Committee chairman, have said reconciliation should only be used for lowering the deficit, and not for enacting policy changes.

Groups representing students say the change would help graduates leave college with less debt, while helping taxpayers by cutting subsidies to private lenders.

“Students are really excited about this legislation [because] they will be able to graduate with less debt,” said Angela Peoples, legislative director of the U.S. Student Association.

But a number of Democratic senators have expressed concerns about the overhaul.

Private lenders are especially focused on Democratic Sens. Bob CaseyRobert (Bob) Patrick CaseyDems hit stock buybacks in tax law fight Dem senator warns Mueller against issuing Russia report near 2018 election Dem praises gay US Olympian who feuded with Pence MORE Jr. (Pa.) and Jeff Bingaman (N.M.), both members of the HELP Committee. Casey has said he is worried about the job losses, and he has held hearings on the legislation in Pennsylvania that he says are intended to increase understanding among students and lenders.

Other possible swing votes include Democratic Sens. Mary LandrieuMary Loretta LandrieuProject Veritas at risk of losing fundraising license in New York, AG warns You want to recall John McCain? Good luck, it will be impossible CNN producer on new O'Keefe video: Voters are 'stupid,' Trump is 'crazy' MORE (La.), Blanche Lincoln (Ark.), Mark BegichMark Peter BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (Alaska), Tom CarperThomas (Tom) Richard CarperTrump states would bear brunt of gas tax increase: conservative groups Trump talk riles advocates on both sides of gas tax Senate bill would let EPA implement global greenhouse gas deal MORE (Del.), Tim JohnsonTimothy (Tim) Peter JohnsonCourt ruling could be game changer for Dems in Nevada Bank lobbyists counting down to Shelby’s exit Former GOP senator endorses Clinton after Orlando shooting MORE (S.D.), Mark UdallMark Emery UdallDemocratic primary could upend bid for Colorado seat Picking 2018 candidates pits McConnell vs. GOP groups Gorsuch's critics, running out of arguments, falsely scream 'sexist' MORE (Colo.), Jim Webb (Va.), Tom UdallThomas (Tom) Stewart UdallCongress fails miserably: For Asian-Americans, immigration proposals are personal attacks Senate rejects centrist immigration bill after Trump veto threat Dem senators want list of White House officials with interim security clearances MORE (N.M.), Arlen Specter (Pa.) and Bill NelsonClarence (Bill) William NelsonGingrich says arming teachers only long-term solution to school shootings Florida students turn to activism in wake of shooting CNN invites Trump to town hall with parents, students of Florida high school MORE (Fla.).

Sallie Mae has donated $272,000 to political candidates so far in 2009, while Nelnet has donated $39,500. In the 2008 election cycle, Sallie Mae spent $912,750 on candidates and Nelnet spent $222,000.