A flurry of articles recently about student loan reform bills and the "jobs" issue:
- Chronicle of Higher Education (subscription required) highlighted the jobs issue last week in "Sallie Mae Fights for Student Loan Role in a Campaign That's All About Jobs."
- The Hill's "Private Lenders Focus On Jobs in Student Loan Fight" mentioned the standard talking points regarding job losses industry-wide and at Sallie Mae specifically, although the Sallie Mae figures in the article need to be corrected (Sallie had previously stated on a conference call that 2,000 jobs were at risk and perhaps more, not 5,200 as the article implies):
"...argues the Student Aid and Fiscal Responsibility Act (SAFRA) approved by the House would cost the economy 35,000 jobs...If the House legislation is approved, Sallie Mae would cut its payroll
from 8,500 employees to 2,300, according to Martha Holler, a company
spokeswoman."
- The Hill also provided expected timing in the Senate for the student loan reform bill: "The Senate HELP Committee hopes to draft a version of the House bill by Christmas, and it’s possible that bill could receive a floor vote early next year."
- Here are the Senators considered as the swing votes: "Private lenders are especially focused on Democratic Sens. Bob Casey
Jr. (Pa.) and Jeff Bingaman (N.M.), both members of the HELP Committee.
Casey has said he is worried about the job losses, and he has held
hearings on the legislation in Pennsylvania that he says are intended
to increase understanding among students and lenders. Other
possible swing votes include Democratic Sens. Mary Landrieu (La.),
Blanche Lincoln (Ark.), Mark Begich (Alaska), Tom Carper (Del.), Tim
Johnson (S.D.), Mark Udall (Colo.), Jim Webb (Va.), Tom Udall (N.M.),
Arlen Specter (Pa.) and Bill Nelson (Fla.)."
- The two that did not appear on an earlier list of wavering Senators were Tom Carper (Del.) and Tim Johnson (S.D.). Interestingly, Sallie Mae announced last year that they would be adding 1,100 credit and collection jobs in 2010-11 at their new Newark, Delaware credit and collection center. Meanwhile, Sioux City, South Dakota is the home of student loan operations for both Citibank and Wells Fargo. During a recent barnstorming tour, Citibank's CEO Vikram Pandit didn't seem to think much would change with Citi's student loan operations there:
"Now the good news for South
Dakota is that it is the latter part that's here, which is the
processing part of that. Whether or not the government makes the loan,
somebody needs to process them, and we're doing that right now. So that
part continues to be..."
Here is my analysis on the jobs issue from an earlier post from August and also a more recent post. The Chronicle of Higher Education also cited a report from the Council of Economic Advisers that I could not track down online, but which had the following conclusions:
"The department points to an analysis by the Council of Economic
Advisers that said direct-loan servicing contracts, which Sallie Mae
will still get if bank-based lending ends, would create new jobs to
help offset job loss. "Many of these jobs are likely to be at the very same banks and
loan-servicing companies that will be affected by the elimination" of
bank-based lending, Christina Romer, the council's chair, wrote to Sen.
Tom Harkin, a Democrat of Iowa and chairman of the Senate education
committee."
Education Lending companies have shut down by the hundreds due
to SAFRA! Thousands of jobs have ALREADY been lost. These are employees with an area of expertise in an industry that no longer exists for them. They have nowhere to go. I know....my husband was an AVP of an educational lending company and has been unemployed for over a year. His staff of a dozen executives throughout the US is also largely unemployed, working in call centers, or cashiering. Many have lost their homes.
Thank you Ted Kennedy and Andrew Cuomo for your efforts to socialize the student loan industry.
Posted by: J. Doe | January 09, 2010 at 10:14 PM