A two-fer for John Boehner
This morning's Times has a very good article about new legislation that will enable
on-line diploma mills to rake in millions in student loan money for worthless
diplomas. Previously, an education institution could do no more than 50% of its
business on-line, which at least skimmed off the more egregious of the scammers
.But the new champion of clean politics, John Boehner, was having none of it. He
championed an amendment that reduced the 50% requirement to 0%.
You don't have to take my word for it that these on-line colleges are bunk-the article makes the case fairly well. In fact, I must admit that in this case the Times reporter, Sam Dillon, makes it hard not to come to some not so flattering conclusions about Boehner:
You don't have to take my word for it that these on-line colleges are bunk-the article makes the case fairly well. In fact, I must admit that in this case the Times reporter, Sam Dillon, makes it hard not to come to some not so flattering conclusions about Boehner:
The Department of Education estimated the
change would cost the government $697 million over 10
years.
Representatives Boehner and McKeon have also pushed through committee other changes sought by the for-profit industry, and lobbyists and lawmakers gave them good chances of passage this year.
Unlike all but a few traditional universities, the for-profits have formed political action committees to channel campaign donations, especially to members of the House and Senate education committees.
While the $1.8 million that executives of the largest chains of proprietary colleges and their political action committees have donated to federal candidates since 2000 is not huge by Washington standards, the money is strategically donated.
About a fifth — $313,000 — went to Mr. Boehner and McKeon and political action committees they control, according to figures provided by the Center for Responsive Politics, which monitors campaign finances.
Mr. Smith said there was "zero" connection between the donations and Mr. Boehner's policy decisions. James Geoffrey, a spokesman for Mr. McKeon, said the donations had no bearing on his choices, either.
Some lobbyists for the traditional universities said that because few of them form political action committees, they are at a disadvantage.
"If I seek an appointment with a member of Congress, I get a staff member, if anybody," said David Hawkins, a lobbyist for the National Association of College Admissions Counsellors, which as a nonprofit group is barred from making campaign donations.
A. Bradford Card, who represents some commercial colleges in New York, said lawmakers were responding to commercial colleges' educational contributions. He said he had spoken several times with Mr. Boehner about his clients' agenda. Mr. Card said he never lobbied his brother, Mr. Bush's chief of staff.
"These are not fly-by-night schools," Mr. Card said "Members of Congress are really taking a look at this industry because they recognize that proprietary colleges are helping people get into the work force, pay taxes and become the best they can be."
A. Bradford Card, by the way is Andrew Card's brother. The Mr. Smith in the quote is a spokesman for Boehner.
Now the cynics out there might question the numerical accuracy of Mr. Smith's statement of the amount of connection there is between all those contributions and Mr. Boehner's interest in this issue. Some might even suggest that he there should be a "10" before that zero. But such people would be wrong. In fact, Mr. Boehner simply has an intense interest in student loans, and believes passionately in maximizing their profit potential. For not only is he interested in helping schools qualify their students for such loans, he's also interested in making sure those loans screw the borrowers to the maximum extent possible. And in the process we can see another example of zero connection between huge contributions and Mr. Boehner's actions (This is long, but I can't figure out what to cut):
Let's talk about Boehner and the financing of campaigns — specifically, his. Boehner raised $172,000 from student-loan companies during 2003 and 2004. What made him worthy of that healthy sum? The answer can be found — but not easily — in the budget reconciliation bill now awaiting final approval from Congress.
Chairman of the Education and Workforce Committee, Boehner had orders to find $13 billion in cuts from the student-loan program. The bankers were initially worried, but Boehner reassured them. "Know that I have all of you in my trusted hands," he told the annual meeting of the Consumer Bankers Association, adding, "I've got enough rabbits up my sleeve."
The federal student-loan program has been an open-pit gold mine for banks. The taxpayers guarantee the companies against both deadbeat borrowers and risks posed by rising interest rates. Uncle Sugar even offers a free hedge against changes in interest-rate spreads that could harm the lenders' bottom line. (Other businesses must go to Wall Street and pay for such services.)
"In American history, this is the most outrageous giveaway ever extended by the federal government to private lenders," says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.
The king of the student-loan business is Sallie Mae. Once a quasi-government agency, Sallie Mae is now an independent, publicly traded company — SLM Corp. The company's stock price has risen 1,900 percent over the past 10 years. And from 1995 to 2004, former CEO Al Lord raked in $225 million. Lord now leads an investors group trying to buy the Washington Nationals baseball team.
Who would have thought there was that kind of money in a government program designed to help working-class kids pay for college and trade school?
Boehner and friends could have saved billions by just taking some honey out of the lenders' subsidies. They did eliminate a "floor" on the guaranteed interest rates — and put on a big show about how they were taking money out of the banks' hides. But actually, they more than made up for that setback with 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.
As we can see, license to abuse student borrowers is as important to building the banks' fortunes as outright taxpayer subsidies. In a hard look at Sallie Mae, Fortune magazine reported on a $38,000 student loan that ballooned to $100,000 after the borrower had been out of work for a while. It found that the annual cost of credit for another person still in school was an astounding 28 percent. That happened after Sallie Mae tacked its exorbitant fees onto its predatory rates.
The Fortune piece questioned what might happen to Sallie Mae's stock price if taxpayers and students got wise to the game. Boehner makes sure they don't, by writing complex laws that only insiders can understand.
Sweet, huh? What a guy. Try googling "John Boehner student loans" and a large portion of your results will be press releases from Boehner trumpeting all the good things he is doing for students. He trumpets the virtues of loan consolidation, but in reality? Not so much :
Historically students were permitted to consolidate loans only one time in order to take advantage of lower interest rates. If lower interest rates subsequently became available, students were permitted to move their consolidated loans to the Department of Education’s Direct Consolidation program and then were given a second chance to take advantage of lower interest rates by reconsolidating again with a private lender. The ability to do that was removed by the budget bill. That makes students unhappy since they would like to think they are just like any other borrower who can always refinance to take advantage of reduced interest rates. Sallie likes the new rules. It means she’ll have lots of long term relationships even though when her interest peaks her swains will find theirs waning. No matter. They’ll remain in her thrall. Mr. Boehner will understand their feelings, he himself having been in her thrall for many years. He can tell them they’ll like her better the more they get to know her. Just as he has.
For predatory "educational" institutions and predatory lenders, it's one stop shopping at the Boehner place.
Representatives Boehner and McKeon have also pushed through committee other changes sought by the for-profit industry, and lobbyists and lawmakers gave them good chances of passage this year.
Unlike all but a few traditional universities, the for-profits have formed political action committees to channel campaign donations, especially to members of the House and Senate education committees.
While the $1.8 million that executives of the largest chains of proprietary colleges and their political action committees have donated to federal candidates since 2000 is not huge by Washington standards, the money is strategically donated.
About a fifth — $313,000 — went to Mr. Boehner and McKeon and political action committees they control, according to figures provided by the Center for Responsive Politics, which monitors campaign finances.
Mr. Smith said there was "zero" connection between the donations and Mr. Boehner's policy decisions. James Geoffrey, a spokesman for Mr. McKeon, said the donations had no bearing on his choices, either.
Some lobbyists for the traditional universities said that because few of them form political action committees, they are at a disadvantage.
"If I seek an appointment with a member of Congress, I get a staff member, if anybody," said David Hawkins, a lobbyist for the National Association of College Admissions Counsellors, which as a nonprofit group is barred from making campaign donations.
A. Bradford Card, who represents some commercial colleges in New York, said lawmakers were responding to commercial colleges' educational contributions. He said he had spoken several times with Mr. Boehner about his clients' agenda. Mr. Card said he never lobbied his brother, Mr. Bush's chief of staff.
"These are not fly-by-night schools," Mr. Card said "Members of Congress are really taking a look at this industry because they recognize that proprietary colleges are helping people get into the work force, pay taxes and become the best they can be."
A. Bradford Card, by the way is Andrew Card's brother. The Mr. Smith in the quote is a spokesman for Boehner.
Now the cynics out there might question the numerical accuracy of Mr. Smith's statement of the amount of connection there is between all those contributions and Mr. Boehner's interest in this issue. Some might even suggest that he there should be a "10" before that zero. But such people would be wrong. In fact, Mr. Boehner simply has an intense interest in student loans, and believes passionately in maximizing their profit potential. For not only is he interested in helping schools qualify their students for such loans, he's also interested in making sure those loans screw the borrowers to the maximum extent possible. And in the process we can see another example of zero connection between huge contributions and Mr. Boehner's actions (This is long, but I can't figure out what to cut):
Let's talk about Boehner and the financing of campaigns — specifically, his. Boehner raised $172,000 from student-loan companies during 2003 and 2004. What made him worthy of that healthy sum? The answer can be found — but not easily — in the budget reconciliation bill now awaiting final approval from Congress.
Chairman of the Education and Workforce Committee, Boehner had orders to find $13 billion in cuts from the student-loan program. The bankers were initially worried, but Boehner reassured them. "Know that I have all of you in my trusted hands," he told the annual meeting of the Consumer Bankers Association, adding, "I've got enough rabbits up my sleeve."
The federal student-loan program has been an open-pit gold mine for banks. The taxpayers guarantee the companies against both deadbeat borrowers and risks posed by rising interest rates. Uncle Sugar even offers a free hedge against changes in interest-rate spreads that could harm the lenders' bottom line. (Other businesses must go to Wall Street and pay for such services.)
"In American history, this is the most outrageous giveaway ever extended by the federal government to private lenders," says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers.
The king of the student-loan business is Sallie Mae. Once a quasi-government agency, Sallie Mae is now an independent, publicly traded company — SLM Corp. The company's stock price has risen 1,900 percent over the past 10 years. And from 1995 to 2004, former CEO Al Lord raked in $225 million. Lord now leads an investors group trying to buy the Washington Nationals baseball team.
Who would have thought there was that kind of money in a government program designed to help working-class kids pay for college and trade school?
Boehner and friends could have saved billions by just taking some honey out of the lenders' subsidies. They did eliminate a "floor" on the guaranteed interest rates — and put on a big show about how they were taking money out of the banks' hides. But actually, they more than made up for that setback with 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.
As we can see, license to abuse student borrowers is as important to building the banks' fortunes as outright taxpayer subsidies. In a hard look at Sallie Mae, Fortune magazine reported on a $38,000 student loan that ballooned to $100,000 after the borrower had been out of work for a while. It found that the annual cost of credit for another person still in school was an astounding 28 percent. That happened after Sallie Mae tacked its exorbitant fees onto its predatory rates.
The Fortune piece questioned what might happen to Sallie Mae's stock price if taxpayers and students got wise to the game. Boehner makes sure they don't, by writing complex laws that only insiders can understand.
Sweet, huh? What a guy. Try googling "John Boehner student loans" and a large portion of your results will be press releases from Boehner trumpeting all the good things he is doing for students. He trumpets the virtues of loan consolidation, but in reality? Not so much :
Historically students were permitted to consolidate loans only one time in order to take advantage of lower interest rates. If lower interest rates subsequently became available, students were permitted to move their consolidated loans to the Department of Education’s Direct Consolidation program and then were given a second chance to take advantage of lower interest rates by reconsolidating again with a private lender. The ability to do that was removed by the budget bill. That makes students unhappy since they would like to think they are just like any other borrower who can always refinance to take advantage of reduced interest rates. Sallie likes the new rules. It means she’ll have lots of long term relationships even though when her interest peaks her swains will find theirs waning. No matter. They’ll remain in her thrall. Mr. Boehner will understand their feelings, he himself having been in her thrall for many years. He can tell them they’ll like her better the more they get to know her. Just as he has.
For predatory "educational" institutions and predatory lenders, it's one stop shopping at the Boehner place.
Posted: Wednesday - March 01, 2006 at 10:11 PM
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Published On: Apr 17, 2007 07:20 PM
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