Posts Tagged ‘student loan’

Obama Takeover Of Student Loans Means 2,500 Layoffs For Sallie Mae

April 1, 2010

What does ObamaCare mean?  It means a 29% slash in the workforce for student loan service provider Sallie Mae.  Remember in this insane world of Democrat rule that the government takeover of student loans was part of ObamaCare, whereas reimbursing doctors for Medicare was not.

Updated March 31, 2010
Sallie Mae Blames 2,500 Layoffs on Obama’s Student Loan Overhaul
By Kelly Chernenkoff

Powerhouse student loan provider Sallie Mae says layoffs are imminent as a result of President Obama’s new student loan overhaul.

“This legislation will force Sallie Mae to reduce our 8,600-person workforce by 2,500,” Conwey Casillas, Vice President of Sallie Mae Public Affairs, said in a statement to Fox News.

Obama was at Northern Virginia Community College in Alexandria on Tuesday to sign the student loan changes into law. The new bill includes a provision for the government to begin directly lending to students, bypassing financial institutions like Sallie May that traditionally have provided the loans. Obama said that such institutions have soaked up billions in subsidies.

“Now, it probably won’t surprise you to learn that the big banks and financial institutions hired a army of lobbyists to protect the status quo,” Obama said. “In fact, Sallie Mae, America’s biggest student lender, spent more than $3 million on lobbying last year alone.”

Indeed, Sallie Mae has been outspoken in its opposition to the plan, calling it a “government takeover” just last month.

“The student loan provisions buried in the health care legislation intentionally eliminate valuable default prevention services and private sector jobs at a time when our country can least afford to lose them,” Casillas told Fox News.

Sallie Mae was trying to garner support for an alternative, which the company said was roundly rejected.

“We are profoundly disappointed that a reform plan that would have achieved more savings for students was ignored and now thousands of student loan experts will unnecessarily lose their jobs,” Casillas said.

But Obama says he’s merely looking out for those in need.

“I didn’t stand with the banks and the financial industries in this fight. That’s not why I came to Washington. And neither did any of the members of Congress who are here today,” he said. “We stood with you. We stood with America’s students. And together, we finally won that battle.”

Obama said the move will save billions, enabling his administration to use the money to improve the quality and affordability of higher education.

Sallie Mae hasn’t said exactly when jobs will start getting slashed, but the cuts “will start soon,” Casillas said.

Obama did a good job demonizing the student loan service providers (after all, demonizing is pretty much the only thing he does well), but the reality is as usual quite different than the Obama demagoguery:

From the Wall Street Journal in an article entitled, “The Quietest Trillion:
Congratulations. You’re about to own $100 billion a year in student loans
“:

It’s not a popular idea on campus. Loans directly from the feds have been available for decades, but the government’s poor customer service has resulted in most borrowers choosing private lenders. This week three dozen college administrators, representing schools from Notre Dame to Nevada-Reno, signed a letter urging a longer transition period to this “public option.” The fear is that the bureaucrats will not be able to pull off a takeover in just eight months. “Any delay in getting funds to schools on behalf of students will result in our needing to find resources at a time when credit is difficult to obtain,” warns the letter.

Tough luck for the Irish. Democrats have already greased this fall’s budget reconciliation to pass all of this on a mere majority vote. They are helped by rigged government accounting that disguises the cost of making below-market loans to unemployed 18-year-olds. Democrats have claimed their plan “saves” $87 billion in mandatory spending by cutting out the private middlemen, and the Congressional Budget Office has dutifully “scored” $87 billion in mandatory “savings” (or a net of $80 billion after subtracting administrative costs).

But in a remarkable letter to Senator Judd Gregg, CBO Director Douglas Elmendorf admits that government accounting is bogus. He writes that the statutory methodology “does not include the cost to the government stemming from the risk that the cash flows may be less than the amount projected (that is, that defaults could be higher than projected).” Mr. Elmendorf further notes that the government’s accounting system is specifically skewed to make direct loans from the government appear to cost much less than guaranteed loans made by private lenders. He says the real “savings” are only $47 billion, even though, in a deception that would be criminal fraud if it weren’t mandated by Congress, the official estimate remains at $80 billion.

Even the unofficial number is dubious. The government has been claiming lower default rates than private lenders, but most government loans have been to students at four-year colleges. The private lenders have serviced a higher percentage of students at community and two-year colleges, where defaults are more common regardless of lender.

If the feds are now making and owning all such loans, expect default rates to soar. When the government hires contractors to collect on its loans, it pays them for simply calling the borrower, regardless of the result. Private lenders, on the other hand, make money from a performing loan and have a greater incentive to do careful underwriting and aggressive collection.

The government will nonetheless start spending these illusory “savings” immediately, and this spending is certain to top official estimates. The Obama plan also adds a CBO-estimated $46 billion in new spending over 10 years to enlarge Pell grants. Ominously for the federal fisc, starting in 2011 these grants will automatically rise each year by the consumer price index plus 1%. Not that students will actually benefit from this subsidy explosion. Colleges have reliably raised prices to capture every federal dollar earmaked for education financing.

Rep. John Kline (R., Minn.) decided the cost estimate for Pell grants was too low, so he asked CBO to take a second look. Along comes another enlightening letter from Mr. Elmendorf. This week he wrote that Mr. Kline is correct—it looks like they will cost another $11 billion. Unfortunately, the earlier estimate must remain the official score under budgeting rules, even though the official scorekeeper says it is wrong.

You start to see why the student loan takeover was part of ObamaCare, but the doctor fix was not: pure deceitful political cynicism of the very worst kind.  ObamaCare forced the CBO to assume the deception that doctor’s Medicare reimbursements would be slashed by 21% so they could deceitfully claim that “saving” for ObamaCare.  Even though Democrats will add those reimbursements back in another bill that will cost a rock bottom minimum of $200 billion.  Meanwhile, they decide that student loans are very much a part of ObamaCare so that they could raid the profits – after, of course, dramatically misrepresenting what those profits actually were.

In one fell swoop, ObamaCare destroys jobs, undermines the student loan system, AND ruins our health care system.

Nice trifecta.  If you’re an enemy of America.

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Democrats’ Bizarro World: Doctor Reimbursements NOT Part Of Health Care, But Takeover Of Student Loans IS

March 13, 2010

Isn’t it amazing that, as far as Democrats are concerned in their way-too-finite wisdom, doctor’s Medicare reimbursements have absolutely nothing to do with health care, but a government student loan takeover suddenly has everything to do with health care?

The $300 billion “doctor fix” has nothing to do with health care because it would explode the totally bogus myth that the Democrats’ health plan is somehow “deficit neutral.”  But now the Democrats are throwing in their student loan takeover to try to sweeten the pot for hesitant Democrats in the House.

Mitch McConnell put what is going on into proper perspective:

“It’s a very bad idea.  We now have the government running banks, insurance companies, car companies, and now [the Democrats] want to take over the student loan business.  I’m not sure the public thinks the current debate is about that issue, and it would show again the lengths they are willing to go to have the government expand its tentacles into absolutely everything.”

So why don’t we go ahead and rename the Democrats “health care” boondoggle for what it really is: the Government Tentacle Expansion Act.

Bill Kristol had this to say when asked about this latest new wrinkle in ObamaCare:

BRETT BAIER: Bill, now Speaker Pelosi has talked about putting in student loans, a change to the student loan program in the vote for health care reform.

What about that? This is the student loan legislation that would end private lender’s involvement in the original student loans and the Department of Education would essentially take over?

BILL KRISTOL: Yes, the government would be the direct loaner to the students. Well that passed the House by a larger margin last year. So they are adding something that they think is more attractive to try to bring home few extra members to the bill.

It shows how unpopular this bill is. It is jaw dropping to step back from the day-to-day thing. A year into president’s top agenda health care is the Democrats favorite issue. They have had 30 point margins on it in polls over the Republicans for the last 15 years basically.

And as this debate has gone along this bill has become so unpopular and toxic that they now can’t pass it through a normal conference committee. They can’t have a normal situation where each house passes its own bill and get together and have a compromise. They have to pass the Senate bill or nothing because they’re terrified to go to conference.

They are now terrified to let the members go home for Easter recess before a vote, so they are going to — the president is delaying his trip so they can jam the vote in at the end of next week, they hope by one or two vote margin. It’s really stunning.

Bottom line: the people – who are now opposed to ObamaCare by a 3-1 margin – don’t want the government to take over our health care system.  And the Democrat leadership is literally afraid to let the Congress go home for Easter recess and hear what their constituents have to say before a vote, lest they respect the will of the people and vote against this monstrosity.  And so, as Obama postpones his foreign trip, the leadership is trying to overcome opposition to ObamaCare by offering as an inducement yet ANOTHER Democrat big government takeover, this time of the student loan system.

President Obama’s approval has sank to an all time low of 46% in the Gallup poll as he has determined to impose his health care boondoggle on the American people who do not want itThe Hill points out that this “demonstrates that the healthcare debate has taken a toll on Obama’s approval numbers.”

A new poll released by the Associated Press finds that the American people overwhelmingly want the Republicans involved with any health care overhaul, rather than having an ideological Democrat boondoggle rammed down their throats:

More than four in five Americans say it’s important that any health care plan have support from both parties. And 68 percent say the president and congressional Democrats should keep trying to cut a deal with Republicans rather than pass a bill with no GOP support.

And only 27 percent of voters want to see ObamaCare rammed down the nation’s collective throat.

And as for what the Democrats are trying to impose:

Fifty-seven percent (57%) of voters say the health care reform plan now working its way through Congress will hurt the U.S. economy.

A new Rasmussen Reports national telephone survey finds that just 25% think the plan will help the economy. But only seven percent (7%) say it will have no impact. Twelve percent (12%) aren’t sure.

Two-out-of-three voters (66%) also believe the health care plan proposed by President Obama and congressional Democrats is likely to increase the federal deficit. That’s up six points from late November and comparable to findings just after the contentious August congressional recess. Ten percent (10%) say the plan is more likely to reduce the deficit and 14% say it will have no impact on the deficit.

Underlying this concern is a lack of trust in the government numbers. Eighty-one percent (81%) believe it is at least somewhat likely that the health care reform plan will cost more than official estimates. That number includes 66% who say it is very likely that the official projections understate the true cost of the plan.

Just 10% have confidence in the official estimates and say the actual costs are unlikely to be higher.

Seventy-eight percent (78%) also believe it is at least somewhat likely that taxes will have to be raised on the middle class to cover the cost of health care reform. This includes 65% who say middle-class tax hikes are very likely, a six-point increase from late November.

And yes, ObamaCare will raise taxes.  In fact, for every one family who gets a subsidy to pay for the Democrats’ health care plan – which will cost $2.5 trillion – three middle class families will be taxed more to provide that subsidy.

Meanwhile, Barry Hussein has just broken his own record for the worst deficit in human history.

A few quotations from Ronald Reagan are in order here:

  • “Government is not a solution to our problem, government is the problem.”
  • “The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution.”
  • “Nations crumble from within when the citizenry asks of government those things which the citizenry might better provide for itself.”
  • “As government expands, liberty contracts.”
  • “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
  • “No government ever voluntarily reduces itself in size.”
  • “Are you entitled to the fruits of your labor or does government have some presumptive right to spend and spend and spend?”
  • “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

The American people have overwhelmingly shouted – and there have been three big statewide elections in states that voted big for Obama to prove that the polls are correct – that they don’t want a government takeover.  And how do Democrats respond?  By offering another government takeover (of the student loan system) as an inducement for Democrats to vote for the government takeover of health care.