"Cause of death: Sallie Mae Private Signature Loan; Return to Sallie Mae so fillings can be melted down for further payment." (photo: T. Roberts Photography via Flickr)
Jane wrote earlier today about the lobbying effort against the student loan bill, a no-brainer piece of legislation that would simply end massive subsidies to banks and student loan servicers and have the government lend directly to students on loans they backed anyway, saving $87 billion over ten years that would be plowed back into increasing Pell Grants and access to higher education. A key element of the lobbying pushback is a claim that curtailing student loan privatization will cost jobs:
President Obama wants to pass the Student Aid and Fiscal Responsibility Act (SAFRA), which cuts out these bankster middle men so the government can save $8.7 billion a year administering the loans directly. The bank lobbyists claim that 35,000 jobs will be lost if that happens. But that 35,000 figure is dubious — the entire student loan industry employs 30,000 people in total, and as Pedro de la Torre writes in The Nation, the number of actual jobs lost could actually be in the hundreds. Hard to tell, because those who promote the 35,000 figure are so vague about its sourcing. It comes from a survey conducted by the National Council of Higher Education Loan Programs, but they don’t seem to document it anywhere on their site.
The notion that all of those jobs will be lost — as the Senate Republican Policy Committee suggests — is ludicrous. These banks will continue to service the hundreds of billions in loans they already have, and they’ll also be able to compete (yes, compete) to service future loans.
The purest example of this con game on jobs to try and forestall progress on ending this corporate welfare came this weekend. Two Democratic Senators from Delaware, Ted Kaufman and Tom Carper, wrote a letter to Tom Harkin, expressing “concern” with SAFRA, and claiming that hundreds of jobs in their home state are at risk. These concerns mirror those from other ConservaDems and Senators with student lending operations in their state, so this makes it a good example:
Supporters say that proposal, which would essentially shutter companies like Sallie Mae out of the federal loan market, could save the federal government $87 billion over 10 years and lower students’ loan payments. However, Carper and Kaufman — who represent the state Sallie Mae in particular calls home — fear the reform could stifle local investment and result in lost jobs.
While they did not explicitly call for the provision’s removal from Harkin’s bill, they did implore the chairman to reconsider its language.
“We also have concerns over the potential impact on Sallie Mae’s operations in Delaware, which employs nearly 700 workers,” they wrote. “We ask that as you draft the committee’s mark … you maintain a role for Sallie Mae in the student lending process that recognizes the important services Sallie Mae has provided millions of students and mitigates any potential job loss in Delaware.”
Matthew Yglesias took a look at this and reasoned that this kind of inefficiency and waste was a price to be paid to maintain boondoggles in various states. But in so doing, Matt takes Carper and Kaufman’s numbers at face value.
Just a quick read of De la Torre’s Nation article shows that Sallie Mae, on the outside, claims that 30% of their workforce would be lost, not the entire workforce, if SAFRA passes. Since there are 700 workers total at Sallie Mae’s operation in Delaware, that lowers the jobs at stake to around 210. In addition, De la Torre notes that Sallie Mae is bringing thousands of jobs back from overseas to compete for Department of Education contracts to service federally administered loans. This is how he shrinks the potential number of lost jobs at Sallie Mae from thousands to a handful.
But there’s more! It turns out that the Sallie Mae offices in Delaware don’t even specialize in federally guaranteed loans, the types of loans at stake if SAFRA passes:
Sallie Mae’s executives support alternative legislation that would achieve savings by putting the government in charge of raising capital for the loans while allowing Sallie Mae and others to continue making and servicing the loans.
They say the bill that passed the House would mean job cuts, though possibly less severe at the Delaware center, which specializes in private loans instead of government-backed loans.
Kaufman and Carper also want to protect Access Group, a non-profit student loan provider which employs 400 in Delaware. But non-profit lenders already benefit in SAFRA with millions in no-bid contracts to service the federally administered loans, meaning that Access Group would be guaranteed an annual contract on at least 100,000 borrowers. So their employees aren’t likely to go anywhere either. There’s nothing good about that deal, but it really makes Kaufman and Carper look foolish for going to bat for this company that’s already been delivered support.
If you add all that up, I can’t imagine that Carper and Kaufman are protecting more than a half-dozen jobs with their opposition and “concern.” What they undoubtedly are protecting are massive subsidies to Sallie Mae and the banks, which go not to job creation but to bonuses and stock payments and corporate coffers.
The Delaware Senators are so proud of their work preserving corporate welfare that they do not link to these letters anywhere on their websites.
