Columbia University Democrats

By James Downie

Five months ago, in passing the Housing and Economic Recovery Act of 2008, the House finally passed a key piece of legislation in the fight for better access to higher education, cutting a huge subsidy to the student loan industry, and redirecting the spending into Pell Grants and lower loan interest rates. The proposal put all funds under the Federal Direct Lending Program, removed the private middle man and shielding students from the numerous corruption scandals that have plagued private lenders. So far, so good, right?

The Senate, however, appears determined to uphold its reputation as the killer of good legislation: in the “upper chamber,” progress towards that magical sixty votes remains stalled. Facing sweeping changes, powerful, corrupt lenders like Sallie Mae have been lobbying their favorite targets on Capitol Hill for a “compromise” version of the legislation. Sallie Mae’s proposal would put the loans in a “participation trust,” and lenders would sell these loans back to the Department of Education after 120 days. While technically reducing the role of private sector (in that lenders must sell back to the DOE), the “compromise” would effectively extend the current lending program indefinitely, pay lenders the same amount as they currently are paid per loan, and give Sallie Mae and its large lending partners a near-monopoly on student loans. In short, a great deal for large lenders, and a lousy one for students.

Departing “Democratic” Indiana senator Evan Bayh is the latest senator to pipe up with support for Sallie Mae. In a letter yesterday to Education Committee chair Tom Harkin, Bayh cited “concerns about the short-term impact reform efforts could have on employment in Indiana,” parroting the Sallie Mae line that “hundreds” of jobs would be lost in Indiana if the House legislation passed. These concerns, even if true, are simply excuses for moderate Democrats to appease their corporate friends. Simply put, hundreds of jobs simply do not compare to the thousands upon thousands of students (including, Mr. Bayh, thousands of Indianans) who each year have their educational futures affected by the student loan industry’s corrupt policies. The White House has made its position clear: President Obama has called the House legislation “a no-brainer,” while yesterday Education Secretary Arne Duncan held a conference call with reporters to bolster support for the bill.  Rhetoric, though, is not enough; the stakes for higher education are too great. If sixty votes cannot be had, the Democrats should stand up for students, and for the young people that put them in power, and pass the House bill through reconciliation.