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UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of ten of America's presidencies and who has edited alternative journals since 1964. The Review, which has been on the web since 1995, is now published from Freeport, Maine. We get over 5 million article visits a year. See prorev.com for full contents of our site

March 12, 2010

SIX DEMOCRATIC SENSTORS BLOCKING STUDENT LOAN REFORM

FACING SOUTH - Reforming the for-profit student loan system, which allows finance giants like Virginia-based Sallie Mae to make virtually risk-free returns thanks to government subsidies, was a top priority of President Obama. His idea, supported by most Democrats, was to take out the middle-man: Instead of subsidizing private lenders, the feds would completely take over origination of student loans.

The result: The Student Aid and Fiscal Responsibility Act, which the Office of Management and Budget estimated would save over $80 billion over 10 years . . . Savings would be plowed back into Pell Grants -- much easier on students on the long-term -- and other higher education initiatives.

But as The New York Times writes, this week six senate Democrats have threatened to derail the Act, writing in a letter to senate majority leader Harry Reid that "provisions of contemplated student lending reform that could put jobs at risk."

The letter was signed by Democratic Senators Thomas R. Carper (DE), Blanche Lincoln (AR), Ben Nelson (NE), Bill Nelson (FL), Mark Warner (VA) and Jim Webb (VA).

The senators' back-stepping, which likely scuttles the possibility of passing the act with the filibuster-proof appropriations bill, comes after over a year of aggressive lobbying by heavyweights in the corporate loan industry. Sallie Mae alone spent $3.48 million on lobbying last year leading an all-out assault by industry reps claiming up to 35,000 jobs would be lost.


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