News Release

Report: Banking Industry Targets Dem Senators To Kill College Loan Provisions In Health Care Bill – and Perhaps Health Reform

Campaign for America’s Future Report Exposes How Banking Industry Uses Former Senate Staffers, Political Contributions and Close Ties to Senate Offices

While insurance industry lobbyists hoping to kill health care reform are shifting their attention to the Senate in the wake of House passage of health reform, Wall Street and bank lobbyists have opened a second front that could harm health reform in an effort to kill the provisions in the health care reconciliation bill that would cut banks out of the student loan business.

Six Democratic senators have already publicly written Senate Majority Leader Harry Reid to express their concerns about passing direct lending through reconciliation. In a report released today, the Campaign for America’s Future details the lobby connections and financial contributions that helped “shape” their opinion. The report, entitled "Money-Changers in the Senate," written by Kevin Connor, explains how former staff aides of the dissenting Democratic senators were enlisted, along with campaign contributions and Astroturf independent expenditures, to enlist Democratic allies in the effort to stop direct lending.

In the blizzard of amendments promised by Republican Minority Leader Mitch McConnell, one focus will be seeking to strip direct lending from the bill. With Republicans united in opposition and six Democratic senators expressing doubts, the financial lobby could have a big impact on the upcoming Senate vote.

“This report details how the banking lobby, led by Sallie Mae, has wielded money and lobbyists, including former Democratic staffers, to try to sustain the billions they make in peddling government guaranteed student loans,” reported Robert Borosage, co-director of the Campaign for America’s Future. “Now with the historic victory in the House, citizens must mobilize to frustrate the lobby’s clout and insure that direct lending is passed, along with the health care fixes.”

The direct lending provision would use the money saved from wasteful subsidies to the banks to help families pay for college education. Instead of subsidizing bank profits, it will increase Pell scholarship grants for low-income students, invest in community colleges and historically black colleges, and allow graduates to cap their student loan payments at 10 percent of income.

“Just as health care reform mobilized fierce industry resistance, student loan reform has triggered a massive lobby campaign by the banking lobby,” said Borosage. “Now, ironically, the lobby is claiming that Democrats are taking money from students to help pay for health care, when in fact the bill takes money from unjustifiable banking subsidies and helps families pay for college education. Senators should understand that their votes on this matter will be watched just as closely as their votes on health care.”

The full report is posted at ourfuture.org/moneychangers. Click here to read the full report.