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.
A key moment could take place this week when financial aid officers attend a Federal Student Aid conference in Nashville. Education Secretary Arne DuncanArne DuncanObama meets with Chicago youth ahead of Monday speech Education's DeVos, unions need to find way to bridge divide and work together Ex-Education head: Trump transgender rollback ‘thoughtless, cruel’ 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 ObamaObama's speech proves hypocrisy of Democrat's anti-Wall Street rhetoric Trump wants to expand offshore drilling Patagonia threatens to sue Trump over national monuments order 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 EnziMike EnziTrump should work with Congress to block regulations on prepaid cards GOP wrestles with big question: What now? Top Dem: Trump's State Dept. cuts a 'Ponzi scheme' 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 HarkinTom HarkinDistance education: Tumultuous today and yesterday Grassley challenger no stranger to defying odds Clinton ally stands between Sanders and chairmanship dream 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 CaseyBob CaseyDems crowd primaries to challenge GOP reps GOP fundraiser enters crowded primary for Pa. Senate seat Pennsylvania GOP rep announces bid for Casey's Senate seat 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 LandrieuMedicaid rollback looms for GOP senators in 2020 Five unanswered questions after Trump's upset victory Pavlich: O’Keefe a true journalist MORE (La.), Blanche Lincoln (Ark.), Mark BegichMark BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (Alaska), Tom CarperTom CarperDems probe claims of religious bias in DHS 'trusted traveler' program Senate Dems want Trump to release ethics waivers, visitor logs Medicare’s coverage decisions need more input from physicians MORE (Del.), Tim JohnsonTim 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 UdallPicking 2018 candidates pits McConnell vs. GOP groups Gorsuch's critics, running out of arguments, falsely scream 'sexist' Election autopsy: Latinos favored Clinton more than exit polls showed MORE (Colo.), Jim Webb (Va.), Tom UdallTom UdallOvernight Energy: Trump orders review of national monuments, claiming ‘egregious abuse’ Dem vows to fight Trump 'every step of the way' on national monuments Senate Dems want Trump to release ethics waivers, visitor logs MORE (N.M.), Arlen Specter (Pa.) and Bill NelsonBill NelsonUnited explains passenger removal to senators Overnight Cybersecurity: Ex-officials warn 'Buy American' might harm Pentagon cybersecurity | Chair nudges Trump on cyber order | House gets security training Cruz looks to boost space industry 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.