College students may finally be seeing the fruits of their electoral labors turn into less pain in the pocketbook.
The Hill reported Mar. 31 that a coalition of student activist groups and congressional Democrats have banded together to put pressure on President Obama to push through legislation which would hold the line on interest rates for federally-backed student loans. The Direct Loan and Stafford Loan programs are set to see interest rates jump in July, in some cases as much as double the current rates. For Chris Lindstrom of the U.S. Public Interest Research Group, inaction is not an option.
“The White House knows that young people turned out in force [in the election] and certainly would be wise to consider that, regardless of whether or not there were an election.”
Democrats acknowledged that President Obama owes his election and re-election to college students, as the voting bloc turned out in huge numbers in both 2008 and 2012, respectively. Connecticut Democrat Joe Courtney told the Hill that the fact President Obama contacted him about this issue speaks volumes about its potential political impact.
“The White House knows that young people turned out in force [in the election] and certainly would be wise to consider that, regardless of whether or not there were an election.”
Though college students and youth voters have been long known for their lack of involvement and apathy, the 2008 election is considered a seminal moment in the history of collegiate voting trends, with exit polls showing a break of 66 pct of all student voters for Barack Obama. Both parties are beginning to acknowledge the power of the collegiate vote, and Heather Smith, President of Rock the Vote, an organization dedicated to driving student voter turnout, told the Chronicle of Higher Education in Nov. 2012 that it would be a very poor choice of either party to take youth voters for granted.
"We can put those rumors of apathy to bed. This voting block can no longer be an afterthought to any political party or campaign."
Republicans, though more muted on the issue, have also weighed in favoring an extension of the low rates for collegiate borrowers, though they have linked this issue to that of reducing the federal budget deficit and deregulation of student lenders. During the 2012 Presidential Election campaign, GOP Nominee Mitt Romney expressed his desire to see not just a reduction in educational borrowing, but also lower tuition costs to keep debt down. Governor Rick Scott of Florida issued a challenge to his state's university to come up with "$10,000 Bachelors Degree" to help drive down costs. Romney's running mate, Paul Ryan, authored an opinion piece in May 2012 in which he called for deregulating the industry as part of the 2012 budget deal.
“The House-passed budget takes steps to tackle tuition inflation…Consequently, student loan debt is on pace to eclipse $1 trillion. This unprecedented level of borrowing, which has surpassed the national level of credit-card debt, is causing young people to graduate with mortgage-sized debt payments, a debilitating hurdle to clear as they seek to start a family, a career, or a business.”
Student loan debt and financial aid issues have long been a source of irritation to both parties. In the late 1970s, the government, in an attempt to entice more private lenders to enter the then-high risk student loan market, passed legislation barring the discharge of student loan debt in Chapter 7 bankruptcy except under extraordinary circumstances. Since that time, student loan debt has been compared to a sort of "latter day slavery," with educational lenders being able to sidestep laws aimed a collection abuses. The situation only became worse with the Great Recession, as more students found themselves in the crosshairs of bank liens, wage garnishments and offsets of their tax refunds because of crushing student loan debt.
“I am concerned that several student loan lenders may be engaging in harsh and inappropriate tactic..."
Allegations also arose years ago that several educational lenders, Sallie Mae among them, gave inducements to financial aid officers at several major universities in exchange for status as "preferred lenders." Adding fuel to that fire were ongoing charges of collections abuses as both Sallie Mae and its collection arm, Pioneer Credit Recovery. Much of this controversy dates back to an attempt by Sallie Mae's CEO, Albert Lord, to sell the company to private investors, a deal which would have netted Lord $225 million.
In Jan. 2012, Cryn Johannsen of Hypervocal.com published a portion of a transcript from a 2007 shareholders meeting in which Lord was having to justify the companies then-somewhat questionable position to investors. One of those challengers was Bill Cavalier of Societe Generale, one of Europe's largest investment houses. When Cavalier questioned how Lord wasn't aware of some of the issues which plagued the taxpayer-contracted student loan servicing company, Lord became terse and defensive in his response, referring Cavalier to one of his subordinates.
"Yeah, that’s exactly right. I’m the CEO. You should give Steve a call. Next question."
After several tension questions with investors, Lord closed out the call with the infamous words "Let's get the f--- out of here." Statements like that, which have since come into the public eye, have driven voters and lawmakers to drive the student loan reform debate.
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