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Senator Elizabeth Warren (D-MA) questions U.S. Federal Reserve Vice Chair Janet Yellen (not pictured) during a Senate Banking Committee confirmation hearing on Yellen's nomination to be the next chairman of the Federal Reserve, on Capitol Hill in Washingt
Wednesday morning, Republicans filibustered Sen. Elizabeth Warren's student loan reform bill that would allow borrowers to refinance their loans, effectively answering the question implied in her pre-vote floor statement:
.@SenWarren: "With this vote, we show the American people who we work for in the United States Senate: billionaires or students."
@JoshDorner
In this case, Warren was talking about the very rich who would be subject to slightly higher taxes to pay for the lower student loan interest rates. But who Republicans are really working for in opposing Warren's effort is the country's largest originator of federally insured student loans, Sallie Mae, which has thrown its weight behind a foundation that supports Warren's chief think-tank critic on the issue, Matthew Chingos of the Brookings Institution. David Dayen "puts it all together.
[I]t’s always worth following the money. And Chingos gives you that road map at his own website, where he lists eight research grants he has received, totaling $1.34 million in all, from several conservative organizations. This includes $500,000 from the Lumina Foundation, which has close ties to Sallie Mae, the corporation that stands to lose the most from Sen. Warren’s refinancing bill. […]

But the more troubling donation to Chingos’ research is the $500,000 grant from the Lumina Foundation, because of its ties to Sallie Mae, the nation’s largest provider of private student loans, and a leading student loan servicer through its subsidiary Navient. Lumina was created in 2000, when USA Group, then the largest administrator of private student loans, sold the bulk of its assets to Sallie Mae, and restructured the rest into a private foundation. The founding chairman of Sallie Mae became the founding chairman of the Lumina Foundation, and four directors of Lumina come from the Sallie Mae board.

Chingos and Lumina have multiple ties. He submitted a paper for the “Lumina Ideas Summit” this April. Lumina president and CEO Jamie Merisotis blurbed Chingos’ 2009 education policy book. And there’s the $500,000 in grant money.

Chingos also gets funding from other right-wing organizations, but Sallie Mae/Lumina connection is clearly the most problematic, because it's Sallie Mae who benefits the most by high interest rates on student loans. This refinancing plan would hit their bottom line, significantly.

Originally posted to Joan McCarter on Wed Jun 11, 2014 at 10:09 AM PDT.

Also republished by Ready for Warren and Daily Kos.

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Comment Preferences

  •  Tip Jar (26+ / 0-)

    "The NSA’s capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything. [...] There would be no place to hide."--Frank Church

    by Joan McCarter on Wed Jun 11, 2014 at 10:09:02 AM PDT

  •  The federal government? (3+ / 0-)
    Recommended by:
    VClib, MGross, nextstep

    93% of loans are now made directly by the government. 40% of those are serviced by SM.

  •  Business as usual. (1+ / 0-)
    Recommended by:
    elwior

    Sometimes I feel like I'm playing a game of cards, except the dealer gets paid whenever I lose.

  •  I think it's a great campaign issue (1+ / 0-)
    Recommended by:
    nextstep

    but lower student loan interest rates funded by higher income taxes will never find 60 votes in the Senate, or even come to a vote in the House.

    I do think lower interest rates on student loans could attract bi-partisan support if it came from spending cuts that the GOP favors, or another source of taxes. A 5% tax on repatriated offshore corporate cash would fund a lot of lower student loans, and the GOP would take that deal in a nanosecond.

    "let's talk about that" uid 92953

    by VClib on Wed Jun 11, 2014 at 10:51:48 AM PDT

    •  Yes, the main thing is getting the rates lowered, (1+ / 0-)
      Recommended by:
      VClib

      as the relief is much needed. It may be time to compromise on the pay for when it comes to cutting into the government's profit on this. As it's profit, not expenditure, perhaps the pay for is less important, or can be worked up in a more creative manner.

      "We the People of the United States...." -U.S. Constitution

      by elwior on Wed Jun 11, 2014 at 11:07:34 AM PDT

      [ Parent ]

      •  Is it clear Federal student loans are profitable? (3+ / 0-)
        Recommended by:
        VClib, MGross, Justanothernyer

        Not only is there the usual default and servicing costs, we now have payment limits tied to income and years of repayment (10 to 20 years) regardless if those schedules result in a fully paid loan.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Jun 11, 2014 at 11:37:56 AM PDT

        [ Parent ]

        •  I think you raise a very interesting point (1+ / 0-)
          Recommended by:
          Justanothernyer

          You may have been part of a group here, a year or so ago, who tried to determine the break even interest rate for this program. I don't remember all the variables, but under the old payment rules we thought the breakeven rate was about 6-7%. Under the new payback rules that is now likely higher.

          "let's talk about that" uid 92953

          by VClib on Wed Jun 11, 2014 at 12:01:53 PM PDT

          [ Parent ]

          •  If the government runs the program at a loss, (1+ / 0-)
            Recommended by:
            Trotskyrepublican

            that's fine with me as they are subsidizing the cost of higher education, i.e., investing in the Nation's future. But at least for now, they're running it at a profit, and that seems wrong.
               If offsets are needed to pass the bill, there are likely some creative things that can be done, there always are.

            "We the People of the United States...." -U.S. Constitution

            by elwior on Wed Jun 11, 2014 at 12:28:03 PM PDT

            [ Parent ]

            •  BTW, this bill did actually get support from (0+ / 0-)

              3 Republicans. Five are needed because these days it seems every single bill is subject to filibuster.
                Getting 2 more Senators on board should not be all that difficult when it comes to taking a popular action such as this one.

              "We the People of the United States...." -U.S. Constitution

              by elwior on Wed Jun 11, 2014 at 12:30:30 PM PDT

              [ Parent ]

              •  The Filibuster Issue Is A Red Herring... (1+ / 0-)
                Recommended by:
                Necrothus

                The Senate is an Institution that has always moved slowly and the Senators rarely want to rock the boat for any reason.  

                Getting around the Filibuster would be simple if Harry Reid wanted to.

                #1  Find a Bill that his (Democratic) members really support and are willing to make personal sacrifices for.

                #2 The same Bill must have "real" public support.  If you misjudge this you are wasting everyone's time and effort.

                #3  Bring the Bill  to the Senate Floor with the normal amount of Debate time.  Allow every member to propose any Amendment they want, Debate them and defeat each one.  Put the Bill up for a "Cloture" Vote.  If the minority wouldn't vote for Cloture, schedule additional (the normal amount) Debate.  Keep the Senate in session until the Republicans have had as much "Debate" as they can handle.

                The Problem is that Harry Reid is too Authoritarian and the Public knows it.  He isn't working for the American people, he only cares about Harry.  He wouldn't be Majority Leader if you or I had run against him in his last election.  

                Elizabeth Warren's Bill would be a good one if she only took half the cost from increased taxes on the "rich" but took the other half from something that Republicans support (and obviously the Democrats don't).  The Republicans couldn't take the heat if the costs were shared equally.  It would be really big on every cable news show and the Republicans would crash after just 2-3 days of continuous Debating!

                Any reasonable person knows that both Elizabeth and Harry would rather get pats on the back from their Base for a failed Bill than get a Bill passed.  Surely there is some Pet Project that Democrats could give for their half to help out all these students.

            •  I too am OK with running the loan program at (1+ / 0-)
              Recommended by:
              elwior

              a loss. However, the profits are now baked into the ten year federal budget, so there either needs to be an offset or a larger deficit. I personally would be pleased to increase the deficit for lower student loan interest rates, but that is unlikely to be acceptable for Congress.

              "let's talk about that" uid 92953

              by VClib on Wed Jun 11, 2014 at 12:37:23 PM PDT

              [ Parent ]

              •  Well then, the revenue offset is the right thing (0+ / 0-)

                to do.
                  And the offset in Senator Warren's bill causes virtually no pain, as those affected can well afford it.
                  And these increases have broad popular support.

                  There is the matter of getting the additional 2 votes needed, and as I said, that might take a bit of compromise.

                "We the People of the United States...." -U.S. Constitution

                by elwior on Wed Jun 11, 2014 at 12:43:40 PM PDT

                [ Parent ]

                •  elwoir - but that bill would never have a vote (1+ / 0-)
                  Recommended by:
                  elwior

                  in the House. As I noted, you can make it something to run on in the campaign, or you can make a deal, but the only way the former students will get a break is to make a deal. Additional income taxes on high income earners is DOA in the House so that's not going to be a deal that works.

                  "let's talk about that" uid 92953

                  by VClib on Wed Jun 11, 2014 at 02:34:00 PM PDT

                  [ Parent ]

      •  ...why should we have lower rates? (0+ / 0-)

        Private unsecured loans run around 7%, which is about where student loans are.

        •  If They Are 7% Now... (1+ / 0-)
          Recommended by:
          BelgianBastard

          with interest at Historical lows, I would hate to be a student getting a loan when we finally have a booming economy.  

          If we get back to an economy where CD rates at the bank are 3-4% again, unsecured rates will go back up to 10-12%!

          Fed Pumping, a Fed Discount Rate of 0.75%, and a flat economy are keeping interest rates very low.

          Young People probably don't realize that home mortgages were 16% 35 years ago and the bank wouldn't loan more than 20% of your income on a house and 28% for all debt including credit cards, child support, and student loans.

          Money is cheap and easy today.

        •  Why? (0+ / 0-)

          Because if capitalist ideologues want to maintain the most ideotic system imaginable for historical reasons, at the very least we should try to make it less inefficient, damaging and evil. Not in that order by the way.

          I ride the wild horse .

          by BelgianBastard on Thu Jun 12, 2014 at 08:10:53 PM PDT

          [ Parent ]

      •  More effective way to lower cost of higher Ed (0+ / 0-)

        would be to end all government subsidies to private higher education, and redeploy those funds to government run higher ed.

        80% of students go to government run higher ed.

        This will reduce the subsidies to private schools then results in them driving up what they charge.  The additional funding to government education will reduce what their students need to pay.

        Since 2007 total student loans have doubled.  The problem is the rapid increase in what schools charge, much more than the interest cost.  The other problem is the terrible job market for those who go to college - with about 50% of them taking jobs that don't require a college degree.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Jun 11, 2014 at 01:15:00 PM PDT

        [ Parent ]

        •  What Is Your Definition Of A Subsidy? (0+ / 0-)

          Pell Grants?
          Guarenteed Loans?
          Federal Tax Credits and Deductions?
          Research Grants?

          Would Private schools be allowed to lease government property?
          What about Trade Schools?

          Do you really think you could get past the lobbyists and pass a bill that says that no student at Notre Dame can get public grants or loans?  Harvard?  Yale?  With all the Harvard and Yale grads in the House, Senate, and White House?

          Don't hold your breath!

          •  All of the above are subsidies that should end (0+ / 0-)

            except for 1) Research Grants when there is equal competition for winning grants across the private sector and government universities and 2) tax credits and deductions generally available to the private sector.

            The private institutions mentioned in the above have massive endowments, for example Harvard has over $30 billion - but they don't follow the general IRS guidelines for other types of non-profits of spending at least 5% of the endowment per year.  The situation with for-profit universities is very different as they don't have significant endowments - they would likely experience a severe decline.

            The transition away from their subsidies should take place over a 4 to 8 year period, so they can adjust to the change.

            The cost of higher education has grown far too fast.  Since 2007 total student debt has doubled.  

            Politically getting public money out of private education will be difficult as those who benefit from government spending will put up a major fight.

            The most important way to protect the environment is not to have more than one child.

            by nextstep on Thu Jun 12, 2014 at 10:07:29 PM PDT

            [ Parent ]

        •  asdf (0+ / 0-)
          would be to end all government subsidies to private higher education, and redeploy those funds to government run higher ed.
          Maybe you can redeploy those funds to a much larger federal scholarship/fellowship program.

          Something that will allow smart but poor students to attend college, and not just those few who manage to hunt down a rare scholarship opportunity.  Imagine a program that will subsidize the tuition of all kids in the top 10 percentile, with a sliding scale for the next 10 percent.

          Taking jokes seriously is the exact mirror activity of laughing if someone says they have cancer. --jbou

          by Caj on Fri Jun 13, 2014 at 07:29:23 AM PDT

          [ Parent ]

          •  Have those students go to Public institutions (0+ / 0-)

            The government does not fund private k-12 when there is a government mandate that all students have free K-12, we should not fund private institutions for higher Ed, where there is no mandate for free education.

            The most important way to protect the environment is not to have more than one child.

            by nextstep on Fri Jun 13, 2014 at 11:12:41 AM PDT

            [ Parent ]

      •  No. The main thing is education for all... (0+ / 0-)

        There are a bunch of ways to get there, say a surtax on college grads who didn't pay their own way or taxes paying for everybody.

        Should those fucked by the current system receive relief? Yes. But excuse me if I have to choke down my vomit when anyone pretends it's a solution.

        I ride the wild horse .

        by BelgianBastard on Thu Jun 12, 2014 at 07:52:57 PM PDT

        [ Parent ]

  •  Defer for Years Before Repaying (0+ / 0-)

    If student loans were designed to offer an education to improve a career, they would defer the repayments for several years after finishing school. The benefits of the education usually take at least a few years of further sacrifice before there's income beyond subsistence (if that).

    Full graduation would defer for the time spent getting the degree; continuing education would push the date back longer. Dropping out would still defer to the original graduation date, probably plus a year or maybe more (since dropouts often do so because of poverty).

    Besides, public schools should be free for anyone graduating in that state. That would be the best investment in the state's economy and people. Which is why public K-12 is already free; college is no less important than K-12 has been for a century.

    Indeed, everyone in school should be paid the minimum wage for the hours their curriculum requires. Unemployed people should be able to get education as a way to live while improving their employability.

    These systems would be so easy - and cheap, compared to the alternatives, especially in reduced jail populations - and just. That they're not a common refrain in discussions of education and credit reform shows how perverted our educational and economics sensibilities have become.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Thu Jun 12, 2014 at 07:33:01 PM PDT

  •  We could solve this by making tuition free. (2+ / 0-)
    Recommended by:
    Odysseus, BelgianBastard

    Make it free at all state schools.

    What kills me about so many liberal attempts at reform is that they tend to work away at the edges of a problem instead of getting rid of the mess itself. And they still get endless pushback from the GOP, even when they go small.

    Yes, it would be better to have direct government loans, with no middle man, and no banks jacking up the costs by taking their cut. But we wouldn't have to worry about those loans in the first place if we just made attendance at all state schools free. Which is the case in several European countries. We are more than rich enough to afford this.

    The Dems must learn that they can get tremendous support from the public if they go big, bold, radical. If they push for things like free tuition for higher ed and Single Payer, they will excite the population, especially the young. They will win future generations in the battle for hearts and minds.

    They're losing them because they keep going small, and all too often, for Republican Lite. No one gets excited about that.

    They're going to have to battle with Republicans no matter what they do. Why not at least fight over something great, visionary, that people actually want and desperately need?

    •  Students would still incur significant debts (1+ / 0-)
      Recommended by:
      diomedes77

      Regardless of the tuition bill, students pay upshot of $10K/year for room and board---at many state schools, room and board is the largest college expense.

      While governments can make tuition free, it is much harder to make the cost of living free.  Even if you achieve free tuition, you'll still see some people borrowing upshot of $40K to live in the dorms.

      Then again, if we make tuition free at all state schools, any remaining loan horror stories will become less of a public crisis---both because the loan amounts will be smaller, and because grotesquely large loans would be harder to blame on the economy or the system.

      Taking jokes seriously is the exact mirror activity of laughing if someone says they have cancer. --jbou

      by Caj on Fri Jun 13, 2014 at 07:22:57 AM PDT

      [ Parent ]

      •  Room and board costs would be in the mix. (0+ / 0-)

        It's a good point. They can be prohibitive. But I can't see a reason why they couldn't be a part of the free tuition program as well. Again, we have more than enough wealth in America to pay for this. Americans brought home roughly 13 trillion in reported income last year, and that's just the stuff we know about it. We're the least taxed developed nation in the world, especially in effective terms for the rich and corporations. We can afford to provide free education from pre-school all the way up and then some.

        And few things are as important to individual quality of life or the health of society overall.

  •  Consolidated with SM out of school and now stuc... (1+ / 0-)
    Recommended by:
    Odysseus

    Consolidated with SM out of school and now stuck with 7.5 percent and 15 more years, wife paid off within this year at 2.1 percent interest

  •  Slightly off-topic.... but: (1+ / 0-)
    Recommended by:
    Odysseus

    Going to college shouldn't require taking out massive loans.

    There are so many reasons for that that I'll probably end up sounding liking a blithering idiot (I'm usually quite good at pretending I'm not ;-) )

    Looking at it from a government standpoint, education is pretty much the best use of public money, by far. It raises incomes, reduces outlays for poverty allievement and increases tax receipts.

    Looking at it from a fairness/moral point of view, it is unacceptable to price poor but smart students out of the 'market' (BB spits). Those from poorer backgrounds disproportionately fear debt. Scholarships help a few and subsidized loans help many more, but the discrimination against those who need help most can't be engineered out of the current system. Taxes should pay for education, not students. In Belgium the most one would pay for tuition is less than $800 dollars a year. If you are poor or your parents have a lot of kids or a bunch of other stuff (usually bad), well then you pay less.

    Looking at it in a financial system way, it's just dumb. You count investments (in future productivity) as debts, not investments. Higher education increases earning power; were it a financial instrument, education would be a T-bill with a stockmarket return and no bubbles. It's basically stupid not to invest unless personal enrichment and sabotage are your stategedy.

    I could go on, because there are endless ways in which education is helpful for everyone except those who are selfish, evil and/or stupid. And even in those cases denying education to as many people as possible will usually be short-sighted. Morally wrong, too.

    I ride the wild horse .

    by BelgianBastard on Thu Jun 12, 2014 at 07:44:04 PM PDT

  •  SLM is a $4B company. (0+ / 0-)

    SLM CORPORATION (NASDAQ: SLM)

    Buy them out and run them better.  Eliminate prepayment penalties, lobby for passage of good policy as an interested party.

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Thu Jun 12, 2014 at 08:01:29 PM PDT

  •  Horns of a dilema! (0+ / 0-)

    Tuition is in a death spiral for many young people.  Universities know the kids can get the money from the government so they have no real incentive to control education costs.  
    Kids know they can get loans so they don't bother to work and save for their tuition. (I worked in a foundry to pay for my education)
    The students need even more loans to pay for the higher tuition.
    This old conservative is liking Ms Warren more all of the time.  I can't stand her voice though.  It's nails on chalkboard!  If anyone can stop the spiral it's probably her!

    •  Unfortunately those jobs are long gone and (0+ / 0-)

      even those that are available, even minimum wage jobs, often require a degree to get in the first place.  So good luck getting any kind of halfway decent job to pay for your degree when you need a degree to get that job.  Perfect catch 22.  

      You have watched Faux News, now lose 2d10 SAN.

      by Throw The Bums Out on Fri Jun 13, 2014 at 08:33:58 AM PDT

      [ Parent ]

      •  doubt it (0+ / 0-)

        There are plenty of part time jobs out there  I could have several this week if I chose to.  None require a degree.  Part of our problem is the pressure to get a degree and not a skill.  Person's with skills and the willingness to adapt, will always be employed

  •  European model (0+ / 0-)

    Ok, so lets go with a European model of very cheap if not free college education but only those who have the grades and aptitude get to go at tax payers expense.  Just because someone wants to go doesnt mean they should or are qualified.

  •  Securitization is behind it (0+ / 0-)

    The driver is securitization of loans.  If the interest rates drop then the stream of income to buyers of securities and fees to securitizer.

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