Democrats Love Banks More Than Students
Blog, Julianne Hing
Mar 12, 2010
From: Race Wire
Time’s running out for student loan reform, and it’s being held up by Democrats in Congress. CBS is reporting that some nine senators currently oppose SAFRA, the student loan reform bill that would replace government subsidies of private (and predatory) lenders like Sallie Mae with a direct student loan program. The bill is currently tied to the reconciliation “fix-it” bill for health care.
The Congressional Budget Office last year estimated that SAFRA would mean a $87 billion savings for taxpayers. And if SAFRA doesn’t pass, officials have warned that Pell grants, which currently serve 8 million low-income college students, would get cut from their current maximum of $5350 to a measly $2150. But SAFRA would actually increase the current rate to $5,550 and be allowed to grow with inflation plus 1 percent every year thereafter.
In the wake of national protests against tuition increases, SAFRA is a much-needed piece of policy for students of color. These days, nearly 70 percent of undergrads graduate with student loan debt. And the average debt level in 2008 was $23,200. Students deserve better than what the largely unregulated student loan industry is currently providing.
But many of the senators who oppose SAFRA are in deep with leading student loan company Sallie Mae, and have taken on the company’s talking points as their own. Namely that if SAFRA passed, Sallie Mae would lose 30 percent of its workforce, a claim that Pedro de la Torre from Campus Progress neatly crushed. He wrote for The Nation:
According to Sallie Mae’s own numbers, even if SAFRA becomes law and the subsidized Family Federal Educational Loan (FFEL) program is abolished, the company may actually end next year with nearly the same number of employees in the United States as it has now, and possibly even more.
Six Democrats (Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia) have nevertheless continued to maintain this line, and jointly signed a letter to Harry Reid announcing that they wouldn't back health care reform if it included SAFRA. Thank goodness the folks at Firedoglake show that the number of college students in each of these senators' respective states completely dwarfs the number of student loan industry employees.
Students of color have reason to be angry. And not just because Sallie Mae's been accused of racial discrimination in its lending policies. Because on the whole, 39 percent of undergrads graduate with unmanageable levels of debt, defined as monthly loan payment that exceeds 8 percent of their income. But 55 percent of Black students have unmanageable levels of student debt, and 58 percent of Latino students leave college with unmanageable debt.
And because it's illegal to refinance private loans, many students get locked into their loans with exorbitant interest rates. In this economy, with so many other pressing bills to pay and so few jobs to be had, defaulting on student loans is not unheard of. Black and Latino graduates end up defaulting on their loans at five and two twices the rate, respectively, of white students.
SAFRA ain't a joke, folks. It's urgent and it's necessary. Call your senator today. Especially if you happen to live in Arkansas, Virginia, Maryland, Nebraska, Florida or Delaware!