College Debt

I was at the Mansfield Community Center exercising and because of an inflamed knee, I was using a glider instead of a bike to burn some calories. The ladies exercising next to me were discussing a law school nephew's college debt.

"Why the interest alone is outrageous! And she needs nice suits and dry cleaning and..." It's a common theme amongst college aged students, parents , and interested observers. And with the stock market meltdown in the past few months, even higher education credit is more difficult to get. Even Congress is concerned.

A few months ago, Education Portal reported a study of how much debt students take on.

According to the Project on Student Debt Report, graduates are leaving college with more student debt than ever before. The result is that starting salaries are no longer keeping pace with the debt.

Between 2005 and 2006, average student loan debt increased 8 percent. In comparison, staring salaries increased by only 4 percent. The worry is that it will become more difficult for graduates to manage debt and pay it off in a timely fashion.

It is popular for presidential candidates to advocate more pay for teachers but teachers are not the only ones whose salaries need attention. And in some cases teachers are farther down the list than they will honestly admit.

Congress Needs to Fire Spellings

My head is going to explode from reading the inane adventures of Margaret Spellings, secretary of the US Department of Education. Aside from the fact that she's run the agency into the ground treating it as a partisan money sink for George Bush's personally insane agenda, she now chooses NOT TO INVESTIGATE the student loan scandal!

Congress needs to just get rid of this agency completely, it is hollow and dangerous to children and taxpayers. The political thugs running it should be banned for life from being near kids. Just go away.

From the Courant, Student Loan Trouble Tied To `Confusion'
Education Secretary Plans No Audit Of `Improper' Payments

By AMIT R. PALEY | Washington Post

Education Secretary Margaret Spellings has acknowledged that the federal government "had some responsibility" for "confusion" over subsidy rules that helped student loan companies reap hundreds of millions of dollars in potentially excessive payments at taxpayer expense.

But Spellings said in a recent interview that she has no plans to pursue a full accounting of the cost of what the Education Department's inspector general termed "improper" payments. They occurred in a program that guarantees lenders a 9.5 percent interest rate for certain loans even when market rates are much lower.

The department doesn't plan to seek reimbursement either, she said.

How do you spell bald political corruption and coverup?

The Department of Education's Student Loan Connection

I'm catching up on a backlog of bookmarks I pick up off the various newsfeeds. A few months go, the Washington Post reported on the revolving door between private sector loan officials and the US Department of Education. Is it any wonder the sending a student to college is like offering them up to indentured servitude for life?

From: Warnings On Student Lenders Unheeded, Bush Aides Derailed New Rules in 2001 by Amit R. Paley, Washington Post Staff Writer, Tuesday, May 1, 2007

"The Department of Education has been run as a wholly owned subsidiary of the loan industry under this administration," said Barmak Nassirian, a longtime advocate for industry reform at the American Association of Collegiate Registrars and Admissions Officers. "They are running the federal loan program for the profit of their friends and not for the benefit of students and taxpayers."

Chad Colby, a department spokesman, said he was not aware of the 2001 proposal but noted that a task force was created last week to consider new rules. The department also defended its hiring of loan industry veterans, saying their expertise was invaluable, and pointed to a 2005 decision by the Government Accountability Office to remove federal student financial aid from a list of "high-risk" programs.

"The U.S. Department of Education takes its role as steward of federal financial aid very seriously," Education Secretary Margaret Spellings, who took office in 2005, said in a statement last week.

No one has been charged with any crime in the investigations led by the New York state attorney general's office and other agencies, but in recent weeks there have been a series of revelations about conflicts of interest and financial links among universities, lenders and government officials. Some Bush administration appointees have said they were unaware of the extent of these controversial practices.

But the 2001 policy draft shows that Education Department officials knew of the issue and that at least some saw a need to act. In addition, some industry executives had sought guidelines on what would qualify as prohibited payments, or "inducements," from lenders to financial aid directors, according to current and former department officials. Several of them spoke on condition of anonymity because of the sensitivity of the matter.

"We have been asked to provide guidance on whether certain practices of [private] lenders and guaranty agencies are considered to be prohibited inducements," according to the 2001 draft obtained by The Washington Post. "We are particularly concerned with allegations that some lenders and guaranty agencies have attempted to hide or disguise an impermissible offer."

Such allegations began to draw increasing attention from the department as early as 1999, according to officials.

Although investigators have found several cases in which lenders made payments to schools that steered business their way, it has not been established that those practices violate federal prohibitions on quid pro quo arrangements. The 2001 proposal addressed that challenge by saying the department would presume that a violation has occurred if a lender offers "something of value" to a school at which it has at least 20 percent of the school's loan volume.

The draft policy, known as "subregulatory guidance," was outlined in a letter by John Reeves, a Clinton-era appointee who served as general manager in a unit of the Office of Federal Student Aid and stayed on for part of the Bush administration. The office's chief operating officer, Greg Woods, another Clinton-era appointee, briefed industry groups on the proposal, according to two people who met with him. But Bush appointees quashed the rules.

"We were like, 'No, we're not going to drop a bomb on the lending community with these wacko ideas,' " said Jeffrey R. Andrade, a senior Education Department official at the time who now works for a loan company.

Reeves declined to be interviewed yesterday; Woods died after leaving the government.

Not everyone agrees that the rules would have had a significant impact.

"People who wanted to work around the rules would have found loopholes, unfortunately," said John Dean, special counsel to the Consumer Bankers Association, which represents lenders and took no position on the proposal.

But Andrade, a former deputy assistant secretary in the Office of Postsecondary Education, said the 2001 proposal was "very draconian," so much so that half the schools in the country would have been found in violation of the policy. The department decided to encourage the financial aid community to draft its own voluntary standards, an effort that ultimately collapsed.

It wasn't long before the department's inspector general issued the first of several reports criticizing a lack of oversight from the agency's Office of Federal Student Aid. A 2003 report to Sally L. Stroup, then assistant secretary for postsecondary education and a former lending agency executive, said the office "has never performed reviews of lenders for the specific purpose of reviewing compliance" with federal anti-inducement rules.

How Seedy Can the Student Loan Scandal Get?

Put on your mud boots. The Washington Post is reporting Student Loan Probe Expands to Include Alumni Associations by Amit R. Paley.

That's right, the older generation is using the younger one in a pyramid scheme that serves only to punish the person taking the loan and enrich the sponsor. During the years of unaccountability that the Bush regime cobbled together the message to this nation's rip-off artists is clear, Why simply privatize when you can pillage as well? Read on.

The New York attorney general has broadened his investigation into the student loan industry to discover whether university alumni associations are steering graduates toward a major loan company in exchange for payments from the lender.

The lender, Nelnet, said it has agreements with about 120 alumni associations across the country, including those affiliated with the University of Maryland and Old Dominion University in Virginia. Nelnet said it typically pays the associations in return for data used to mail marketing materials to graduates.

"Unfortunately it appears that student loan scams don't end at graduation," New York Attorney General Andrew M. Cuomo said yesterday in a statement. "Our investigation seeks to put an end to kickback schemes and payoffs that benefit lenders and their partners - be they schools or alumni associations - at the expense of students trying to control their debt."

The Student Loan Scandal Broadens

The New York Times is reporting in Federal Official in Student Loans Held Loan Stock by Jonathan D. Glater and Karen W. Arenson that numerous University officials realized windfall profits on student loan stock speculation.

A senior official at the federal Education Department sold more than $100,000 in shares in a student loan company even as he was helping oversee lenders in the federal student loan program.

The official, Matteo Fontana, now general manager in a unit of the Office of Federal Student Aid, was identified yesterday from government documents as a stakeholder in the parent company of Student Loan Xpress who sold shares in 2003.

His involvement with the company emerged a day after a widening investigation into the student loan industry revealed that three senior financial aid officials at Columbia University, the University of Texas at Austin and the University of Southern California had also sold shares at the same time.

The stock sales raise questions of conflicts of interest on the part of university officials charged with giving students advice on financial aid and loans and a government official who helped oversee the industry.

The Education Department said late yesterday that Secretary Margaret Spellings had just been briefed on Mr. Fontana and that the department was taking the matter “very seriously.”

“We are providing the department’s inspector general all relevant documents regarding this matter,” Samara Yudof, a spokeswoman, said in a statement. Officials declined to answer questions about the stock transaction.

The government documents, filings with the Securities and Exchange Commission, show that Mr. Fontana sold 10,500 shares in the company in 2003, when they were valued at around $10 a share. He came to the department in 2002 and at the time of the sale was in a slightly more junior position than now, overseeing lenders in the student loan program.

Mr. Fontana did not return calls, and it was not clear what he had originally paid for his shares. At least two of the three university financial aid directors originally paid about $1 a share.

Student Loan Xpress is currently owned by the financial services company CIT Group. C. Curtis Ritter, a spokesman for CIT, declined to answer questions about Mr. Fontana’s dealings with the company.

CIT Group Inc. also has a top university official on its board: John R. Ryan, the chancellor of the State University of New York, which has 64 campuses and more than 400,000 students.

In a telephone interview yesterday, Chancellor Ryan said he believed strongly that there was no conflict between his positions as SUNY’s chancellor and as a CIT director, a post that paid him nearly $150,000 in cash, stock and stock options. He earns $340,000 from SUNY.

As the Education Department responded to questions about Mr. Fontana’s stock ownership, the University of Texas and the University of Southern California followed Columbia’s lead and suspended their financial aid directors pending the outcome of internal investigations into the officials’ relationship with Student Loan Xpress. Columbia also removed the loan company from its spot on the university’s preferred lending list.

All three universities had given Student Loan Xpress a spot on the lists. Students generally rely on the lists for seeking a loan rather than shopping for the best terms.

Mr. Fontana’s participation in the stock sale, which was first reported by the New America Foundation, a Washington policy institute that has focused on student loan issues, caught the attention of lawmakers already looking into the student loan industry.

Cuomo Reports Student Loan Corruption

This is a story flying under the radar that is important. MSNBC reports in N.Y. AG alleges student loan corruption by the Associated Press that colleges are getting kickbacks on certain student loan arrangements.

“There is an unholy alliance between banks and institutions of higher education that may often not be in the students’ best interest,” Cuomo said. “The financial arrangements between lenders and these schools are filled with the potential for conflicts of interest. In some cases they may break the law.”

Investigators found that many colleges have established questionable “preferred lender” lists and entered into revenue sharing and other financial arrangements with those lenders.

In the process, students have been denied their choice of lender, or faced difficulty using that lender, hurting their chances of getting better loan terms, the attorney general said.

Two-thirds of college students take out loans for college, he said.

According to Cuomo, investigators found:

* Lenders pay kickbacks to schools based on a percentage of the loans directed to the lenders.

* Lenders foot the bills for all-expense-paid trips for financial aid officers to posh resorts and exotic locations. They also provide schools with other benefits like computer systems and put representatives from schools on their advisory boards to curry favor.

* Loan companies set up funds and credit lines for schools to use in exchange for putting the lenders on their preferred lender lists and offer large payments to schools to drop out of the direct federal loan program so that the lenders get more business.

How uncool is that?

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Rearing Children After College, "Adultolescence"

In late December, Money Magazine online published this report called Your adult kids are back. Now what? by Jean Chatzky, Money Magazine editor-at-large. It speaks to the growing phenomenon of College graduates who return home broke and financially dependent. Read on.

But boomerang kids are now so common that social scientists have dubbed the phenomenon "adultolescence," a period following college that can last five or more years.

More than 65% of graduates are moving back home, compared with 53% just five years ago. And while the difficult stages of childhood may have had lasting emotional impact, this one has financial ramifications galore for you - about $5,000 a year, on average, in assistance - and your kid.

How did adultolescence come about? Blame rising college costs and rampant consumerism. Today the average graduate emerges with nearly $20,000 in student loans and $4,000 in credit-card debt. Meanwhile, she faces a world in which rents have skyrocketed over recent decades but starting salaries, adjusted for inflation, have dropped 17%. She can't cut it, so she falls back on the bank of Mom and Dad for support in the form of either cash or an invitation to move back home.

Click on the link for the entire story - a good read.

Restoring Reasonable Student Loan Interest Rates

I just received news that Joe Courtney won the Second Congressional of Connecticut by a little over 90 votes! As a Democrat he'll have the opportunity to contribute to the effort by Democrats to restore sanity to college student loan interest rates.

From CNN, "Dems: make student loans student friendly
Companies that make money in education have had good friends in Congress. That may change under the Democrats, says Fortune's Bethany McLean" by Bethany McLean, Fortune editor-at-large.

George Miller (D-California), who is likely to become the new chairman of the House Committee on Education and the Workforce, wants to cut interest rates on student loans in half.

Last spring Senator Hillary Clinton (D-New York) introduced a Student Borrower Bill of Rights. Among its tenets are a cap on loan interest as a percentage of a borrower's income. "A Democratic majority will definitely have an opportunity to change student-loan law," says Michael Dannenberg, who directs education policy at the New America Foundation, a Washington think tank.

It's no secret that change is needed. A just-released report commissioned by the Secretary of Education calls for "complete restructuring of the current federal financial aid system."

Cost is a major culprit. Tuition has grown at double digits for more than a decade, and federal aid has not kept up, resulting in often crippling levels of student debt.

As a blogger using the name "collegedebt4life" writes, "We went into debt to get an education so that we could get good jobs, and we find that we have mortgaged away the rest of our lives by taking out student loans."

Read the entire article here.

Today's Educational Scandal; Private Student Loan Data And the FBI

Yawn! Should I waste breath mentioning that this is yet another Bush-era (will it ever end!) low-point. Why bother. We're so far away from textbook America these days that we may as well believe we'll all win big lotteries this week.

The number of outrages in this latest scandal are many. Let's start at the top (all quotes from: Education Dept. Shared Student Data With F.B.I. by JONATHAN D. GLATER, New York Times).

The Federal Education Department shared personal information on hundreds of student loan applicants with the Federal Bureau of Investigation across a five-year period that began after the Sept. 11 terror attacks, the agencies said yesterday.

Under the program, called Project Strikeback, the Education Department received names from the F.B.I. and checked them against its student aid database, forwarding information. Each year, the Education Department collects information from 14 million applications for federal student aid.

Oh. I'm not Columbo so I'm guessing, like me, you're all wondering why. I mean, what's more important - that there's a terrorist on campus somewhere or that the terrorists are abusing their loan money?

The effort was reported yesterday by a graduate student, Laura McGann, at the Medill School of Journalism at Northwestern University, as part of a reporting project that focused on national security and civil liberties.

In a statement, Mary Mitchelson, counsel to the inspector general of the Education Department, said, “Using names provided by the bureau, we examined the Department of Education’s student financial aid databases to determine if the individuals received or applied for federal student financial assistance.”

Information collected on federal financial aid applications includes names, addresses, Social Security numbers, incomes and, for some students, information on parents’ incomes and educational backgrounds.

Generally, only United States citizens and permanent residents are eligible to apply for federal student financial aid.

An assistant director of the F.B.I., John Miller, said in a statement: “During the 9/11 investigation and continually since, much of the intelligence has indicated terrorists have exploited programs involving student visas and financial aid. In some student loan frauds, identity theft has been a factor.

See what I mean? This seems antithetical to American justice.

If the list of 100s were terrorists then the Student Loan data is co-incidental - they should be arrested and tried, no? But the explanation implies that the Department of Education had a "don't ask, don't tell" policy of granting student loans and financial aid to -cough- students who aren't citizens, whose parents don't pay taxes, and who might be getting a freer ride in school than your kid or mine! Much of the other eclectic assertions made by the authorities don't justify this warrantless invasion of privacy this action exercises.

How many terrorists exploited student visas? I haven't heard of any. Student loan frauds? Why fish for these? Were these hundreds of students Americans or not? And if the terrorists were stealing identities then wouldn't the entire fourteen million applications be suspect?

Could this witch-hunt get any more dubious? OH, YEAH! We are, after all, talking about the Deapartment of Education.

A spokeswoman for the bureau, Cathy Milhoan, said the Education Department had provided financial aid information on fewer than 1,000 names in connection with terrorism investigations.

The information sharing was disclosed as the Education Department examines a proposal by the Commission on the Future of Higher Education, established last year by Education Secretary Margaret Spellings, to create a national student database that would follow individual students’ progress as a way of holding colleges accountable for students’ success.

“This operation Strikeback confirms our worst fears about the uses to which these databases can be put,” said David L. Warren, president of the National Association of Independent Colleges and Universities, which represents 900 institutions. “The concentration of all this data absolutely invites use by other agencies of data that had been gathered for very specific and narrow purposes, namely the granting of student aid to needy kids.”

I could swear that they said it was hundreds of student records. We're half-way through the article and we're already up to nearly one thousand!

But what's this about the Department of Education holding colleges accountable for students' success? Is the Department of Education now ensuring the success of loan and grant recipients? This so much sounds like social engineering and a grade fixing scheme.

As usual the Main Stream Media likes to wrap these civil liberties stories with a smiley face ending:

Ms. Mitchelson of the Education Department said a review of the files of the people named by the F.B.I. had not led to any cases that charged student loan fraud.

Ms. Mitchelson said the information sharing was possible under a law that permits a federal agency to release personal information to another agency “for a civil or criminal law enforcement activity.”

She said the department had spent fewer than 600 hours on the program, including 50 hours over the last four years.

Ms. McGann, the journalism student who reported on the program, said she saw data sharing mentioned, but not described, in a report by the Government Accountability Office that she reviewed in the spring as part of a research project after a seminar on investigative reporting.

“I thought that was pretty unexpected for the Department of Education,” said Ms. McGann, 24, who graduated this year from Medill. “So I decided I would try to look into that a little more.”

She said she found another mention of the program in a report from the inspector general’s office in the department.

In June, Ms. McGann went directly to the Education Department.

“Eventually, I did an on-camera interview with a deputy inspector general there who did comment on the program,” she said.

She said his name was Michael Deshields.

“After that,’’ Ms. McGann added, “I decided I should file a Freedom of Information Act request.”

Last month, she received documents in response to her request that were heavily redacted, she said. Among them were Education Department memorandums describing F.B.I. requests for information on specific people whose names were blocked out and an internal memorandum dated June 16, 10 days after her interview, stating that the data sharing program had terminated. The name of the author of that memorandum was also redacted, she added.

I'm confused. If the agencies are using "the information sharing was possible under a law that permits a federal agency to release personal information to another agency “for a civil or criminal law enforcement activity”" then how can they claim that the "that the data sharing program had terminated?" Somebody's missing the point, as Dick Cheney would say, "BIG TIME!" Somebody needs to identify this magic law and demand that a subpoena be required to make such transfers of data. Secondly, margaret Spellings' alterior motives for collecting data on students and parents needs to seriously questioned.

The Bush administration has made a mockery of justice in this country and using private, often tax dependent, data collected indirectly by government agencies against the neediest of Americans is just another low blow to the American psyche. Our private income tax data must be protected from exposure except to the intended audiences.

Personally, I cannot believe Republicans think these policies are in any way acceptable. Pull the plug on funding this rabid presidency, Congress, and House. They cannot be voted out of office soon enough.

The Velvet Military Draft

The Bush administration refuses to reinstate the military draft. Why bother?

The alternative plan is not only to force teenagers to enlist but to make as much money as possible doing so. As you know, college loans are no longer guaranteed reasonable rates of interest. Those borrowing will be paying that debt until they're in their late middle ages.

Now, comes news that this administration has found a way to punish families that save as well. From the Courant;

The kiddie tax was created nearly 20 years ago. It affects a child's unearned income - typically interest, dividends and capital gains. It does not apply to money that a child earns on a job.

As it now stands, the tax applies to those under 14. The first $850 of a child's unearned income isn't taxed. The next $850 is taxed at the child's rate. Anything above that is taxed at the parents' rate.

After children turn 14, investment income is taxed only at their rate, not the parents'.

Under the new tax bill, the kiddie tax would apply to those under 18. The change would be retroactive to the start of this year.

Here's how the change would affect a child's tax bill:

Assume that a 15-year-old's tax rate is 10 percent and that her parents are taxed at 35 percent.

If the teen has taxable interest income of $10,000, under current law her tax bill would be $1,123, said Bob D. Scharin, a senior tax analyst with RIA, a provider of tax information in New York. Once the kiddie tax age limit is raised, her tax bill would go up to $3,283, he said.

Soon the only teenagers who will be able to afford college will be those receiving GI benefits. Maybe that's the new draft, strangle higher education.

Legalizing High School Robbery

Thanks to Republicans like Rob Simmons, most high school students who will depend on financial aid of one kind or another will be lucky to keep a shirt on their backs. The latest tax legislation is carefully crafted to offer a few crumbs to the middle class while punishing parents and students.

As Connecticut Blue observes, "Simmons is one of the few Second District residents that will benefit from this bill. The rest of us will be saddled with paying the principal and the interest on the debt we will rack up in order to transfer our money to rich people like Rob". The Center on Budget and Policy Priorities lists the criminally negligent consequences of Bill: H R 4297.

$20 for the middle class, $43,000 for millionaires. Middle-income households would get an average tax cut of just $20 from the agreement, according to preliminary estimates by the Urban Institute-Brookings Institution Tax Policy Center, while the 0.2 percent of households with incomes over $1 million would get average tax cuts of $43,000, and the top 0.1 percent of households (whose incomes exceed $1.6 million) would get average tax cuts of $84,000.

But to complain about this -cough- "transfer" of wealth from the not-rich to the ultra-rich would be nothing more than petty jealousy on the part of the not-rich so we can't talk about how it will affect local budgets.

You see, when the not-rich have less money to spend the not-rich are less likely to vote for school and local government budgets. Bad for schools, fire departments, police, and other not-rich constuencies.

But let's peel the onion one more skin.

Today, The Student Business by Ralph Nader, is an article that talks about your child's chances of ever paying off a student loan.

In February Congress did act on student loans in another way - backward. It cut $12 billion out of the student loan programs, mostly from students and parents. In a report just out, the California Public Interest Research Group (CALPIRG) found that in California, 17.9% of public college students and 28.8% of private college graduates have unmanageable student loan debt were they to take jobs as teachers or social workers. Yet these critical careers desperately need college graduates to replenish their ranks. (To download the full report, go to http://www.calpirg.org. See also http://www.studentloanjustice.org.)

Last Sunday, May 7th, I turned on CBS' 60 Minutes which unloaded on Sallie Mae in a devastating segment about its power, greed and profits.

Originally a government-sponsored enterprise like Fannie Mae, Sallie Mae was privatized in 1997 and is now the largest private lender to students. But not entirely private. The federal government is its guarantor. Michael Dannenberg of the New America Foundation told Leslie Stahl: "It may be called 'private'.but it's not private at all. Frankly it's a socialist-like system. It's not as if this private entity is assuming any risks. No, no, no. The law makes sure that this so-called private entity has virtually no risk."

It gets worse. Let's say a graduated student defaults. The government pays Sallie Mae both the principal and the interest compounded. But the loan is still subject to collection. Guess who owns some of the largest collection agencies - you guessed it, Sallie Mae. When its collection agency collects, it gets 25% of the recovery. The profits go to Sallie Mae.

The corporate lawyers who conceived this self-enriching system ought to get the nation's top prize for shameless perversity.

Shameless perversity! The holy rollers who have taken complete control of this government say they talk to God, that the non-rich "don't share their values", and tell us underfunded schools need to be held accountable. And just a minor footnote on their "values" - for the first time in my life - torture, eavesdropping, sado-masochism, prostitution, money-laundering, national fraud in a multiplicity of critical areas, cover-ups, political paybacks, kickbacks, and back-stabbing, the destruction of a major American city including neighboring suburbs in three states... I am likely to exhaust myself naming the sins, high crimes, perversions, and witless incompetence that so naturally and casually has become business as ususal in the Bush theocracy.

And gutter bureaucrats like Rob Simmons have no problem with any of it except that it has an outside chance of hurting their election chances.

Voters reinforce the idea that schools are turning out idiots. Just look at the national election results. Stupid is as stupid does. The kids don't deserve this.

Sheepskin and indentured servitude

The issue of college debt based on Bush's deregulation of student loan interest rates is coming home to roost. Here CNN takes a look at the phenomenon;

Student loans - a life sentence
Forget about getting married and buying a home. This generation is thinking about next month's payment.
By Christian Zappone, CNNMoney.com staff writer
May 1, 2006: 4:25 PM EDT

A growing issue for the economy and society

The cumulative effect of such student debt on graduates is unclear, although few would argue that its impact will be positive for the graduates, the economy or society.

"We've never done this to a generation of young people before," said Dr. Heather Boushey, Senior Economist at the progressive Center for Economic and Policy Research. "We've never put a generation in their 20s in debt they can't get out of before they started their work life."

"The normal approach in any healthy society is to help young married couples get started in life through marital gifts, dowries, and the like," Allan Carlson of the socially-conservative Howard Center for Family, Religion, and Society said.

"We now burden many young adults with student debt, sometimes massive in nature; the price being paid includes marriages delayed or foregone and fewer children. This is foolish public policy."

Reverse the Raid Act

The premise of NCLB is that all high school students now prepare for college. Such platitudes deny the unaffordable expense of college and the Bush administration's tangled special interest complicities in driving up the interest rates on student loans. These loans now prepare college students for an early life of debt and lowered living standard than any generations of college student to come before. That is, unless the family is independently wealthy.

The linked article advocates change;

The Raid On Student Aid
By Earl Hadley
TomPaine.com

Friday 14 April 2006

Rep. George Miller, D-Calif., and Sen. Richard Durbin, D-Ill., have introduced the Reverse the Raid on Student Aid Act of 2006 , which would cut interest rates on college loans in half. The typical student borrower would save $5,600 over the duration of their loan. As with national security, Democrats have stepped up with an alternative and progressives must now do our part to get that message out.

To make college affordability an election-year issue we need to put the Reverse the Raid Act in front of the Republicans and the media. Progressives need to force the Republicans to stand either with America's students and middle-class families or with their special interest friends. With this goal in mind, the Campaign for America's Future has launched a petition campaign, demanding that House Majority Leader, John Boehner, R-Ohio, endorse the Reverse the Raid Act.

We've targeted Rep. Boehner because he is the poster child of the Republican failure on college affordability. As former Chairman of the House Education and Workforce Committee he shepherded through the $12 billion cuts. Boehner helped to make sure that students and parents continue to pay excessive interest rates on college loans, while protecting the interests of his financial backers-student loan companies like Sallie Mae, which has donated $122,470 to Boehner's PAC. While Boehner and his fellow Republicans have tried to justify their cuts to college assistance with rhetoric about deficit reduction, when the tax cuts for the wealthy are accounted for, the Republican slash'n'burn plan actually increases the deficit.

The bottom line is that our students don't have time for Republican word games. Republicans need to answer once and for all whether they are looking out for America's students or special interests. Let's begin by putting House Majority Leader John Boehner on the hot seat.

The Student Loan Sharks

This Fortune article tells parents and prospective college loan seekers just how expensive college will be:

Sallie Mae: A hot stock, a tough lender
To drive growth, the education-lending giant is socking students with rates of up to 28%.
December 14, 2005: 3:03 PM EST
By Bethany McLean, FORTUNE senior writer

The giant of the student loan industry is the Student Loan Marketing Association, better known by its friendly-sounding nickname, Sallie Mae. Many people think that Sallie Mae, like Fannie Mae and Freddie Mac, is sponsored by the U.S. government. And until recently it was. But at the end of 2004, Sallie became an independent, publicly traded company, completing a process begun in 1996.

It is now radically different than it was even five years ago -- an aggressive, highly profitable lender and a stock market superstar. Since 1995 its stock has returned over 1,900 percent, trouncing the S&P 500's 228 percent gain. Today Sallie's stock sells for 22 times earnings and almost ten times tangible book value, "an almost unheard-of valuation for a financial institution," as a Criterion Research report noted.

Sallie's dividend has risen at an average annual clip of 18 percent over the past ten years. And thanks to hefty helpings of stock options, Sallie's top executives have earned fortunes. From 1999 to 2004, just-retired CEO Al Lord -- now the lead investor in a group trying to purchase the Washington Nationals -- received total compensation of $225 million. New CEO Thomas "Tim" Fitzpatrick made $145 million over the same period.

To produce those sorts of numbers, a company usually has to be obsessed with the bottom line, and Sallie is certainly that (a big chunk of its executives' bonuses is based on Sallie's profits). As good as that may be for shareholders, a growing number of critics contend that those profits are coming at the expense of Sallie's other constituents: students and taxpayers.

"Sallie advocates policies we believe are frequently contrary to the interest of students," says Luke Swarthout, a higher-education advisor to the U.S. Public Interest Research Groups. He charges that Sallie used its political clout to shape new legislation that will increase the cost of student loans.

Ira Rheingold, executive director of the National Association of Consumer Advocates, decries Sallie's growing presence in the ugly business of collecting on defaulted debt. Pennsylvania state representative Doug Reichley alleges that Sallie is engaging in "predatory lending."

Indeed, Sallie uses high interest rates and fees to charge students as much as 28 percent annual interest on loans. As a result, some have seen their school-loan debt balloon into six-figure delinquencies that they can't hope to pay when the collection agency (which nowadays may be owned by Sallie) comes calling.

I've quoted the important part for tax-payers and borrowers. The article includes the usual 'buts and therefores'. Make no mistake that soaking students and parents has become a huge, unregulated, and unconscionable business. Please thank the Bush administration cronies this November.

Shame on Simmons

I just got word saying that "Rob Simmons broke his word and voted in favor of drilling in the Arctic National Wildlife Refuge (ANWR) as well as substantial cuts to Medicare, Medicaid, student loans, and other important programs."

He's all about -cough- "helping people", especially helping insiders help themselves [to our national treasures].

I suspect CABE will be sending him a certificate of appreciation any day now.