What is the best reason to not vote Republican?Republicans favor the private interest over the public good.An example?The Bush Administration's attempts to undermine the federal direct loan program to benefit special interest tells a story of who is running the government.
Within this story lies disturbing venality, campaign contributions influencing legislation, and a scam to enrich corporations at the expense of taxpayers.
What Republicans are striving to kill is the federal government direct-loan program from the Clinton era that loans students money for college. For every $100 borrowed, it earns the government 22 cents after subtracting administrative expenses.
Instead, Republicans favor private student loans.For every $100 borrowed from private lenders, it costs the treasury $12.80. Republicans want to kiss the hand that has fed them: private interest. Private companies make lucrative profits on this other type of federally backed loans, the Federal Family Education Loan Program (FFEL).
The Sallie Mae corporation, once public but now almost fully privatized, is the behemoth of the FFEL program in the student-loan industry, for it has good reason to be. The government guarantees repayment on loans. Some students default.Subsidies guarantee profit.
Behind this lies a rosy story of romance, between Republicans and their seductive suitor, the commercial loan industry.
In fine muckraking journalism, even conservative-leaning U.S. News & World Report exposed this growing corruption of Republicans and the Bush administration by private interest in its Oct. 27 cover story "Big Money on Campus."
It found the Bush administration's subsidy to private lenders "cost taxpayers about $432 million last year. The tab this year could top $500 million."
U.S. News quoted one anonymous Education Department official as saying, "Essentially, the federal government is paying an excessive fee to drive its own, less expensive program out of business. As a taxpayer, that makes no sense." Sen. John Edwards, D-NC, was correct to say, "That money shouldn't be used to provide subsidies to lenders but to get kids in college."
Big money is responsible for this nonsensical subsidy.In sum, the two biggest education lenders, Sallie Mae and Nelnet, contributed $626,761 in PAC donations, $552,000 in "soft money" campaign contributions, and spent $2.5 million in lobbying expenditures for only 2002.They did not do this to be nice.
Guess who donated the second-largest amount to the campaign of Rep. Howard "Buck" McKeon, R-CA, the chairman of a key House education panel? Sallie Mae's political action committee and its employers. What a coincidence!
Across the Capitol, Sen. Judd Gregg, R-N.H., chairs the Senate Education Committee (the HELP Committee). In another random coincidence, Gregg's wife, Kathleen Gregg, found herself appointed to the Student Loan Marketing Association's board of directors by President Bush. Sallie Mae is wholly privatized except for the Association, which pays Mrs. Gregg $20,000 a year. In another stroke of coincidence, Sen. Gregg's former chief of staff, J. Bonnie Newman, serves on the board.
Inside the executive branch, lackeys for corporations serve on important posts at the Department of Education. Their appointments demonstrates the priorities of the Bush Administration.
There is William Hansen, who served as Deputy Secretary of Education between 2001 and 2003, the second-highest education post. He previously learned how to serve the public well as the CEO of the Education Finance Council, a group of private lenders. Hansen also became more virtuous by leading a political action committee that sent money to politicians' campaigns who backed private lending. The Bush administration knows how to pick 'em.
Beneath Hansen as Deputy Assistant Secretary of Education was Jeffrey Andrade. A teacher? No. A principal? No. A professional lobbyist for the Consumer Banking Association? Yes!
Instead of choosing someone who has spent time in the classroom, the Bushies selected a promoter of the public good, Andrade, who U.S. News described as having "lobbied to limit the ability of the direct-loan program to compete with commercial lenders." That is a guy all should want in charge.
At least the current Head of the Office of Federal Student Aid should be the biggest cheerleader of public financing of college educations. Wrong. Theresa Shaw serves special interests with a smile. Surprisingly, her most prominent post was at Sallie Mae, where she learned about the public good as senior vice president and as chief information officer. Shaw wakes up every morning yearning to put socially-beneficial solutions ahead of private interest considerations of corporations that employed her for over 22 years.
Clearly, Republicans are too enamored with their neoliberal ideology to notice the practical facts that public loans are cheaper for taxpayers and better serve the public interest. Their corresponding venality is disturbing. This student loan scam serves well as a parable of the Bush administration's placement of philosophy over pragmatism. It shows just how easy it allows special, private interests to open the legs of the public interest.
(Brandon Possin's column appears Fridays in the Cavalier Daily. He may be reached at bpossin@cavalierdaily.com)
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