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Obama Will Take On Some Powerful Interests In School Lending Fight

This is such a powerful special interest group, I wonder if Obama will win this one. And it's not the regular colleges that are the real cash cows - i

This is such a powerful special interest group, I wonder if Obama will win this one. And it's not the regular colleges that are the real cash cows - it's proprietary trade schools. Some of their officers are incredibly well connected - like former Republican congressman and super lobbyist Vin Weber, PNAC signatory and member of many, many right-wing institutions - who is also a partner in ITT Training Institutes, where I worked very briefly as an admissions counselor. (I was "encouraged" to sign up anyone with a pulse, despite a previous court order ordering them to cease such practices. After I left, I tried to file a complaint with the DoL about forced unpaid overtime. But I was told by the wary investigator that the company was "too well connected" for anything to come of it. He was right.)

Let's put it this way: their lending practices leave a lot to be desired, much like the subprime mortgage industry. ($30K for an associate degree with non-transferable credits? No wonder Republicans are such big boosters of trade schools!) I really hope Obama pulls this off:

WASHINGTON — The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.

The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell grants for the poorest students.

But the proposal has ignited one of the most fractious policy fights this year.

Because it would make spending on Pell grants mandatory, limiting Congressional control, powerful appropriators are balking at it. Republicans say the plan is proof that Mr. Obama is trying to vastly expand government. Democrats are divided, with lawmakers from districts where lenders are big employers already drawing battle lines.

At the same time, the private loan industry, which would have collapsed without a government rescue last year, has begun lobbying aggressively to save a program that has generated giant profits with very little risk.

UPDATE: The New York Times has an editorial on the subject.

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