Blog entry

Conservatives Can't Vouch for Vouchers, But They Will Mislead

Isaiah J. Poole — Tue, 17 Jun 2008 11:45:45 -0400

The propaganda machine supporting school vouchers, headquartered in the office of Education Secretary Margaret Spellings, is determined not to let the facts get in the way of conservative ideological spin.

The press release for a report released Monday on the D.C. Opportunity Scholarship Program—a masterfully euphemistic name for a program that uses public funds to pay for private school education—is headlined: "Report Reaffirms Academic Gains for D.C. Opportunity Scholarship Participants."

The report actually says this:

After 2 years, there was no statistically significant difference in test scores in general between students who were offered an OSP scholarship and students who were not offered a scholarship. Overall, those in the treatment and control groups were performing at comparable levels in mathematics and reading.

The mean scores for D.C. Opportunity Scholarship students were a whole three points higher than the mean scores of students outside the program in reading (621.30 vs. 618.12). They were virtually identical in mathematics (614.09 vs. 613.85).

In fact, it is difficult to find anything in the actual report that would justify the claim that the 1,900 students in this voucher program—which the administration is seeking $18 million to continue—are better off than they would be if those same dollars—as well as the same parental engagement and other factors of school success—were invested in the public schools that these students would otherwise attend. (This is one reason D.C. Delegate Eleanor Holmes Norton has been a longtime opponent of the voucher program and, The Washington Post reports, is pressing to have it phased out.)

Yet, Spellings issues a statement that runs contrary to the Bush administration's constant drumbeat of insisting that government programs that don't measure up get the ax:

"While [the report] reflects the reality that this program is still in its early stages, this report also tells me that no one in a position of responsibility can sever this lifeline right now and leave these kids adrift in schools that are not measuring up-not when they have chosen to create a better future for themselves."

Ideology trumps results. So does the twisted logic that says there are only two choices—allow the right to outsource public education to private interests that have little or no public accountability, or "set kids adrift in schools that are not measuring up."

What about a real partnership between federal officials and local communities to actually improve the public schools—backed by the resources actually needed to do the job? That was the promise of the No Child Left Behind law that has been badly broken by the Bush administration and conservatives in Congress.

There is an alternative policy approach to the false promise of school vouchers. Learn more about it at BoldApproach.org and show your support for educational reform that would actually make a difference for our children.

Making Sense of the Rising Cost of College

Alex Carter — Thu, 29 May 2008 12:45:39 -0400

As college students celebrate graduation this May, their joy is combined with the harsh reality they face post-graduation--many of these students will graduate with unmanageable levels of loan debt that they can not afford basic necessities. Conservatives will tell you they are dedicated to expanding educational opportunities and in the same breath let the banking and student loan industry know, “I have all of you in my two trusted hands.”

The basics are clear:

- When Bush took office in January 2001, the cost of tuition at a public four year institution was $3,501. The cost of tuition in 2006-07 was $5,685 —an increase of 39%; even at the same time median household income has decreased 2% .
- The social safety nets are failing under Bush’s watch: over 400,000 qualified high school graduates can not attend college each year because of its burdensome cost, the Pell Grant only covers 33% of a student’s annual college costs (in 1975, the Pell Grant covered 84%) , and he stripped over $12 billion from the federal student loan program to fund his tax cuts for the wealthy.

The connections are clear as well; President Bush and conservatives did everything to fatten the pockets of the bank and loan industry while ignoring the plight of qualified high school graduates obtaining a college education. Conservatives did nothing to help promote college affordability and accessibility for years. Pell Grants remained at the same level, affordability was not addressed, and state-tuition levels continued to skyrocket. Bush’s yearly budgets contained massive cuts in higher education funding and favorable policies to the $85 billion private student loan industry.

However, Bush and conservatives made sure the bank and loan industry was taken care of. The private student loan industry’s cozy relationship with Republicans and their “Raid on Student Aid” was of no coincidence. During the tenure of former Chairman of the Committee on Education and Workforce Rep. Job Boehner (R-OH) told the Consumer Bankers Association,

“Relax. Stay calm…at the end of the day, I believe you’ll be at least satisfied, or even perhaps happy….
Know that I have all of you in my two trusted hands.”

It just so happened, the student loan industry contributed over $290,000 to Boehner’s PAC and the private student loan goliath Sallie Mae was the number one contributor to his campaign in the 2003-04 election cycle.

We must continue to connect the dots; Bush and conservatives in Congress do not care about college accessibility and affordability; however, they place the banking and loan industry in their “two trusted hands.”

For more about the college aid issue, click here (www.ourfuture.org/makingsense2008)

Education: Losing Ground in Global Competitiveness

Alex Carter — Fri, 28 Mar 2008 10:45:45 -0400

Newly released data by the Department of Education illuminates the educational landscape of America. There is much for progressives to feel good about; enrollment in Pre-K programs has dramatically increased since 1980; the pupil-to-teacher ratio is declining—meaning classrooms are not as packed as before (even though overcrowding is a major problem for urban school districts); the number of high school students graduating continues to grow, and the number of people over the age of 25 with a high school, bachelor’s or graduate degree has increased as well.

However, some disturbing findings in this report underscore vital needs of our education system that have not truly been addressed: teacher’s salary increased only 1%-after inflation since 1995-96. The result is that inadequate pay leads to a disastrous teacher retention rate. In addition to being underpaid, teachers are forced to spend their own money for classroom supplies —because otherwise their students just won’t have them—on top of paying off college loans and the cost of living.

The report also finds that the average reading score of 17-year old students is the same in 2004 as it was in 1971. These students are at a transition stage from which they will take their education into real-world application or continue to college—however, the lack of improvement in reading skills leaves them—— unprepared for most future endeavors.

Finally, the most troubling news is about how our educational system compares with the rest of the world. The Department of Education provides statistics of the United States ranking in comparison of other countries educational systems in four areas: mathematics, reading, science, and problem solving. The results are astonishing.

• Mathematics—The United States ranks 25th out of the 30 Organization for Economic Cooperation and Development (OECD) and is well below the average score.
• Reading—The United States ranks 16th out of the 30 OECD countries and barely beat the average score (by 1 point).
• Science—The United States ranks 20th out of the 30 OECD countries and is well below the average score.
• Problem Solving—The United States ranks 25th out of the 30 OECD counties and is well below the average score.

In comparison to previous years, the United States is making improvements at home. Compared to the rest of the world, we are losing ground.

Decoupling Education & Upward Mobility

Terrance Heath — Wed, 26 Mar 2008 11:44:22 -0400

Like some middle class kids in my generation, education was a high priority. In my house it was emphasized as the doorway to upward mobility. (The idea of learning for learning's sake was something I discovered later.) If I wanted a "good job," I'd better — at least — get an undergraduate degree. It wasn't a question of if I'd go to college, but where, as far as my parents were concerned.

"Where you'll go," I recall my dad saying, "I don't know. But you're going to somebody's university." My dad's desire for me to go to college was probably due in part to his never having been. The son of sharecroppers, he left the far via the draft, and never looked back. Despite his lack of a college degree (he did earn technical school degree, as I recall), my dad managed to find a "good job" and make a "good living" to provide for his family. He believed getting a college education would help me do the same and do better.

My dad did well despite not going to college, and I believe I've benefited immensely because of the college education he helped me get. I doubt I'd be doing the kind of work I'm doing without it. But in the current economy, stories like my dad's and mine may be fewer and far between.

I was reminded of my Dad when I read that good jobs are harder to find for less educated workers.

The steady loss of "good jobs" by less-educated workers has left them more vulnerable to recession than at any time in nearly 30 years, and signs are mounting that a recession is either already here or coming soon.

High-school dropouts and even high-school graduates who lack specialized job training have seen their already limited employment prospects steadily decline during America's decades-long shift from a manufacturing-based economy to a service economy.

For how man American families was this kind of job — a blue collar job with a livable wage and good benefits — a doorway to upward mobility, securing the education of their children, and ensuring they might do better economically than their parents? My family was one of them, and I wonder if one of the reasons my dad emphasized education for us was because he was already seeing that shift occurring.

Of course, the "good jobs" described in the article didn't simply vanish. They had help disappearing.

The Center for Economic and Policy Research defines a "good job" as one with health insurance, a pension plan and earnings of at least $17 per hour. That works out to about $34,000 a year, the inflation-adjusted median income for men in 1979, when U.S. manufacturing jobs numbered 19.6 million, an all-time high.

Since then, however, the economy has lost nearly 6 million manufacturing jobs — 52,000 in February alone. Among them were many of the 3.5 million "good jobs" lost from 2000 to 2006, according to John Schmitt, a senior economist at CEPR.

As those jobs disappeared, many blue-collar workers were forced to take jobs with far less pay and benefit security.

...Helping fuel the loss of good jobs has been a decline in union membership, industry deregulation, increased outsourcing of state and government services and economic policies that focus more on containing inflation than on maintaining full employment, Schmitt said.

Anti-unionization, deregulation, and increased outsources are all hallmarks of contemporary conservatism. So, at least we know who to thank for our current situation. But that's the unspoken message of conservative economic philosophy in a globalized economy: the only way Americans can "compete in a global economy" as envisioned and delivered by conservatism is to accept a lower standard of living. As low as the market demands. How low? Read up on working and living standards in just about any country you can find on any label on just about anything in your own house.

When those high school graduates and high school dropouts find few of the kind of "good jobs" mentioned above are available to them, they'll find themselves increasingly competing with educated, experience, unemployed white-collar workers for those jobs.

An unusually large share of workers have been out a job for more than six months even as overall unemployment has remained low, a little-noted weakness in the labor market that analysts said threatens to intensify the impact of the unfolding economic downturn.

In November, nearly 1.4 million people -- almost one in five of those unemployed -- had been jobless for at least 27 weeks, the juncture when unemployment insurance benefits end for most recipients. That is about twice the level of long-term unemployment before the 2001 recession.

The problem is ensnaring a broader swath of workers than before. Once concentrated among manufacturing workers and those with little work history, education or skills, long-term unemployment is growing most rapidly among white-collar and college-educated workers with long work experience, studies have found, making the problem difficult for policymakers to address even as it grows more urgent.

"What has happened is a polarization of the labor market. It was very strong at the very top and very strong until recently at the bottom," said Lawrence F. Katz, a labor economist at Harvard University. "But in the recent weak recovery, and now recession, demand has been very weak" for jobs in the middle.

..."When people are losing good jobs these days, they have a very hard time getting back to the type of job they had before," said Andrew Stettner, deputy director of the National Employment Law Project, an advocacy group that presses for more generous unemployment benefits.

Are we approaching a point at which education is no longer a reliable route to upward mobility? Can people no longer educate themselves in to the middle class and beyond?

Probably. What this means is that educated, skilled workers facing unemployment in the context of the global marketplace, will be faced with the reality of accepting work that their skills and experience surpass, and with it they will accept lower wages, fewer benefits and a lower standard of living. These are people who were sold the idea of membership in the ownership society, some of whom maybe even "voted like owners," who will take their place in the society of the owned because they have bills — subprime mortgages, credit card bills, etc., — to pay.

The final adjustment may be the looming reality that — as college education is priced beyond reach for many Americans, and student loans become harder to get — the ranks of college educated, skilled workers may decrease to the same level as the demand for such workers. And upward mobility will disappear in the education gap.

Economic mobility, the chance that children of the poor or middle class will climb up the income ladder, has not changed significantly over the last three decades, a study being released on Wednesday says.

The authors of the study, by scholars at the Brookings Institution in Washington and sponsored by the Pew Charitable Trusts, warned that widening gaps in higher education between rich and poor, whites and minorities, could soon lead to a downturn in opportunities for the poorest families.

The researchers found that Hispanic and black Americans were falling behind whites and Asians in earning college degrees, making it harder for them to enter the middle class or higher.

This will effect students in areas hit by the subprime mortgage crisis and foreclosures as school budgets are impacted by declining revenues from property taxes. The conditions under which students in these communities must learn will become less and less conducive to learning.

As is often the case with conservatism, we don't find out how bad things are until they've gotten almost too bad to tackle. Preferably, perhaps, we don't find out until something reaches near disaster proportions. From the war in Iraq to the subprime mortgage crisis, seven years of conservative failure have left us with a set of crises that will require a great deal of time to fix before we can even think about progressive change.

Add "the dropout disaster" to the list, brought to us care of "No Child Left Behind."

When it comes to high school graduation rates, Mississippi keeps two sets of books.

One team of statisticians working at the state education headquarters here recently calculated the official graduation rate at a respectable 87 percent, which Mississippi reported to Washington. But in another office piled with computer printouts, a second team of number crunchers came up with a different rate: a more sobering 63 percent.

...Like Mississippi, many states use an inflated graduation rate for federal reporting requirements under the No Child Left Behind law and a different one at home. As a result, researchers say, federal figures obscure a dropout epidemic so severe that only about 70 percent of the one million American students who start ninth grade each year graduate four years later.

...The multiple rates have many causes. Some states have long obscured their real numbers to avoid embarrassment. Others have only recently developed data-tracking systems that allow them to follow dropouts accurately.

The No Child law is also at fault. The law set ambitious goals, enforced through sanctions, to make every student proficient in math and reading. But it established no national school completion goals.

NCLB may be one of the reasons kids drop out, as it focuses more on "teaching to the test" and on individual students' learning needs. Schools are so torn between helping struggling students and meeting NCLB requirements that some students fall through the cracks.

Most troublesome to some experts was the way the No Child law’s mandate to bring students to proficiency on tests, coupled with its lack of a requirement that they graduate, created a perverse incentive to push students to drop out. If low-achieving students leave school early, a school’s performance can rise.

No study has documented that the law has produced such an effect nationwide. Experts say they believe many low-scoring students are prodded to leave school, often by school officials urging them to seek an equivalency certificate known as a General Educational Development diploma.

“They get them out so they don’t have them taking those tests,” said Wanda Holly-Stirewalt, director of a program in Jackson, Miss., that helps dropouts earn a G.E.D. “We’ve heard that a lot. It happens all over the system.”

Schools are so focused on meeting NCLB requirements, that they have no time to focus on meeting the needs of students who may have learning disabilities or difficulties — or who may just learn differently than the methods NCLB requirements demand. So, now NCLB is being adjusted again.

But, to a degree, the damage has been done. And we have more dropouts than we thought. What they're going to do — what they'll be able to do, or what there is for them to do — is anybody's guess. But — in a economy where decoupling seems to apply not only to economies, but to the relationship between education, employment, and upward mobility — their stories probably won't be like my father's or like mine.

Now, I'm a father. I look at our five-year-old, and I see how well he's reading already, how curious he is, and how sharp his mind is. I even look at our three-month-old, and I see how he loves to be held upright so he can see the world around him, and how he's already started figuring out that he can make something happen when he pushes one of his favorite toys. We've already started saving for their educations, but I'm no longer sure that education will ensure for them, what my father hoped it would for me.

Instead, I find myself hoping their stories will be somewhat like mind. I know I'm supposed to hope their stories turn out better, and I'll do everything I can to make that happen. But if "making the grade" is no longer a path to "moving on up," then it looks like the decoupling of education from employment, upward mobility, and the American Dream is at least underway. Or maybe it's already happened.

College Costs: Reality Bites Again

Alex Carter — Wed, 24 Oct 2007 13:16:10 -0400

The College Board this week released its new Trends in Higher Education report, and it shows how our lack of public investment is putting a college education out of reach of working families.

The report examines college costs, financial aid, and the importance of a college education. It notes that while for the 2007-2008 school year tuition increases at four-year colleges are not as high as they have been for the past five years, total federal grant funding for undergraduates has still not caught up, when inflation is taken into account. In fact, the report says, "total federal grant funding to undergraduates was still lower in 2006-07 than it was three years earlier, after adjusting for inflation."

This is happening at the same time legislatures in many states are not appropriating enough funds to cover legitimate increased education costs.

The College Board report makes clear why the College Cost Reduction and Access Act is needed:

Tuition and fees at public and private universities rose at a rate of more than double the rate of inflation.
While undergraduate federal borrowing declined from 2005 to 2007, private undergraduate loans grew 12 percent during the same period.
There is a positive correlation between higher levels of education and higher earnings for all ethnic groups, and graduates are more likely to have employer-provided health and insurance and pension benefits.

The importance of a college education cannot be overstressed. As tuition rates rise and median household incomes decline—median household income for African Americans, for example, has declined 8 percent from 2000 to 2006—college education is needed more than ever in this age of technological advancement.

That is why it is important to support grassroots organizations in the struggle to make college more affordable, such as the Campaign for College Affordability. Critical to the effort to keep college education affordable and accessible is to promote federal loan programs instead of the private loan industry and to hold state legislatures accountable for adequately funding higher education.

A $46 Billion Slap In The Face

Isaiah J. Poole — Tue, 23 Oct 2007 12:53:29 -0400

The irony of President Bush's demand on Monday for $46 billion in additional emergency spending for the war in Iraq and Afghanistan—an irony missed by most of the news media—is that it occurred as the Senate debated an appropriations bill for domestic education, labor and human services programs that President Bush has threatened to veto—over a comparatively minor $9.6 billion.

Once again, we have an administration fighting over what is, in the scale of a $3 trillion budget, dimes and quarters when it comes to needs of ordinary families, while demanding Congress shovel money, no questions asked, to feed the war machine in the Middle East. For anyone who really cares about spending priorities, the President's statement was a $46 billion slap in the face of a public sick of his budget posturing.

A read through the White House veto threat for the Labor, Health and Human Services and Education appropriations bill, S. 1710, offers a window into the absurdity of the administration's posturing. Among President Bush's objections:

An allocation for the Department of Education that is $4.1 billion over the administration's request.

An increase of $87 million over the administration's request for hospital preparedness grants. (Hmm, homeland security spending the administration actually criticizes.)

A proposal to give the Department of Labor $1.3 billion more than the administration requested, most of which would be allocated to job training programs.

President Bush's request is over and above the nearly $200 billion already spent on the war in Iraq and Afghanistan. And that money, in turn, as Senate Majority Leader Harry Reid noted, is on top of the $450 billion in emergency funds Congress has authorized for the war since it began.

As Reid pointed out, in this quote from The Baltimore Sun's blog:

"President Bush wants us to rubber stamp another $200 billion in war funds - all borrowed money, none of it paid for - for next year alone. But when we sent a bipartisan CHIP bill to his desk to provide health insurance for the children of working families, the President called it too expensive. Let's remember, every dime of the money for CHIP was paid for.
"It's no wonder the American people are frustrated. Democrats continue to fight for America's priorities while the President continues investing only in his failed war strategy - even as most of his own Pentagon leadership is now on record saying that our ground forces are stretched dangerously thin because of the current Iraq strategy."

President Bush has painted congressional Democrats as the ones stymieing forward movement on the federal budget, but in this case it is Senate Democrats who have shown the most willingness to compromise. One of President Bush's objections was expanded funding for embryonic stem-cell research. According to Congressional Quarterly, Sen. Tom Harkin, D-Iowa, who is chairman of the appropriations subcommittee handling the Labor-Health and Human Services budget, said Democrats are dropping that provision.

"So we have met the president halfway, and we're hopeful that he will join us in this spirit of bipartisan compromise," Harkin said. "I am an optimist, and I hold out hope that if the president examines the substance of the bill, he will see that the additional funding above his budget request goes to essential programs and services that have been shortchanged in recent years."

If President Bush was really concerned about excessive spending on ineffectual programs, he would allow a more critical eye on the money poured into an enterprise that has not enhanced our security but has proven to be a feast for corrupt private contractors and others who profit from war and destruction.

If he wants to use a vote on this $46 billion as a test of who really "supports the troops," let him. House Appropriations Committee Chairman David Obey has said he will not take up the request until next year, and when he does, he's promised to add language mandating a withdrawal timetable. Legislators with a backbone and a commitment to the will of the majority of the American people will vote for that money—to fund the quick end of the war and the return of the troops to their families.

Bush Exceeds His Credit Limit

Alex Carter — Fri, 28 Sep 2007 16:00:13 -0400

On Thursday, President Bush took credit for signing the College Cost Reduction and Access Act. His claims stand history on its head. Bush said the bill:

"[E]xpands one of America's most important and successful education initiatives—the Federal Pell Grant Program. For the last six years, I've worked to make sure that we expand Pell Grants."

He seems to have forgotten that he was president during the last six years. President Bush and the Republicans, when they were in the majority in Congress, repeatedly defeated Democratic attempts to increase Pell grants. Since 2001, Pell Grant maximum awards to individuals have fallen by $99. In the past three years, total Federal Pell Grant expenditures declined by $1 billion.

Bush even threatened to veto the bill he is now taking credit for. But a majority of Republicans recognized the change in the political winds and signed onto the Democratic legislation, giving it a veto- proof majority. Only then did he decide to sign it.

How dare President Bush take credit for this piece of progressive legislation? The real heroes are leaders Rep. George Miller and Sen. Edward Kennedy, and thhe grassroots coalition, the Campaign for College Affordability.

The Cost of College: A Win for the Good Guys

Eric Lotke — Thu, 27 Sep 2007 12:17:05 -0400

What a difference a year makes. The Republican-controlled 109th Congress doubled student interest rates and cut $12 billion out of student aid.

The new Democratic 110th Congress has cut the student interest rates and put $20 billion into aid programs. The money comes directly out of the banks' pockets and into the pockets of students and working families.

Nancy Pelosi and the Democrats get credit, to be sure. College affordability was one of the "Six in '06" campaign promises, and Pelosi hit it out of the ballpark. Representative George Miller, D-Calif., was a hero, and Massachusetts Senator Edward Kennedy worked hard in the other chamber.

But real credit goes to the progressive community. The Campaign for College Affordability banded together to drive for reform. Members such as U.S. PIRG, the United States Student Association, Campus Progress and the Campaign for America's Future provided tactical intelligence and public support. They gave the members the cover they needed to overcome veto threats without watering down the legislation.

My past blog post discussed the payola for the banks, and our report and web page show how college is soaring out of reach (from 2000 to 2006, household incomes went down 2 percent while tuition went up 37 percent). Here I want to summarize the new legislation.

• Pell Grant Increase: Increases the Pell Grant over the next five years from $4,050 to $5,400; with an initial increase of $490 for this upcoming school year.

• Lender Subsidies: Takes over $20 billion dollars away from private lender subsidies and reasserts that money into increased student aid programs.

• Subsidized Stafford Loans: Reduces the interest rate on subsidized Stafford loans by half, starting on July 1, (from 6.8 percent to 3.4 percent) over four years; these loans to go students who demonstrate financial need.

• Loan Repayment and Forgiveness:
Starting July 1, 2009, borrowers would not have to devote more than 15 percent of their discretionary income to repaying Stafford student loans. After 25 years, all borrowers who are in this income-based repayment program will have any remaining balances forgiven.

• Teacher Tuition Assistance:
Undergraduate and graduate students who commit to teaching certain subjects, such as science and math, in low-income public schools for at least four years can receive up to $4,000 per year - for a total of $16,000 - in tuition assistance.

• Loan Forgiveness:
Borrowers who work in other public-sector jobs such as the military, law enforcement, firefighting, nursing, public defenders, librarians and early childhood teachers can have any balance on their student loans forgiven after 10 years of service and loan repayment.

This bill shows what can happen when progressives stand together and refuse to back down. May this strength be a harbinger of things to come.

The Cost of College: Relief is in Sight

Eric Lotke — Thu, 06 Sep 2007 13:38:06 -0400

At last we get a little good news. The new Congress is presenting to the President a package of legislation designed to help working families afford the skyrocketing cost of college. He’s threatened to veto it but we’ll get to that later. Start with the good news.

Help is needed

• Last week’s Census data showed that median household incomes fell 2 percent between 2000 and 2006.

• The National Center on Education Statistics shows that public college tuition rose 37 percent over the same period. (The details are in our latest college affordability report.)

The stats show why families are scrambling so hard for college. Use our spreadsheet to push the numbers around to your heart’s content. My favorite finding: The cost of private college is 57 percent of a median household income. That means that if a family with two children wants to send both kids to private college, it costs 114 percent of the household income – leaving less than nothing food, clothes, medicine or the roof that makes it a "household."

The last Congress hit students hard

The 109th Congress hit students hard. They raised interest rates on student loans and cut funding for grant programs. As we have documented in prior reports, they seemed to prefer banks to students.

• The behemoth Sallie Mae Corporation, manager of $123 billion in student loans, contributed $2.8 million to political campaigns between 1994 and 2006, two-thirds to Republicans.

• Sallie Mae’s profits nearly tripled from 2000 to 2006, from $500 million to $1.4 billion.

• A digression: The whole notion of Sallie Mae is obsolete. It was created in the 1970s by a government concerned to help children finance their educations. At that time, students looked like poor financial risks. Young in age, with little credit history and few personal assets, they were not attractive candidates for private-sector lending – certainly not for the large sums needed to finance a college education.

The federal government helped solve the problem by creating incentives for banks to lend. The Federal Family Education Loan Program (FFELP) guaranteed lenders a higher interest rate than the base market rate, ensuring a healthy profit on monies loaned. On top of that, the government guaranteed payment of principle and interest in case of default. For the banks, it was a win-win proposition: higher interest rates with no real risk. The Student Loan Marketing Association (Sallie Mae) was created to manage the money.

Now the market is mature. Well-educated, high-earning college graduates have proven to be excellent credit risks, and student lending has grown into a highly profitable industry that starts $85 billion in new loans every year. Sallie Mae spun off from the government and privatized. Formally registered as SLM Corp., Sallie Mae has one of the highest returns on revenue in the Fortune 500.

But the government still subsidizes the interest rate and guarantees against default. No wonder Sallie is so happy.

The new Congress asserts itself

The 110th Congress is about to send some changes to the President. The higher education package centered around HR 2669 and S.1642 makes these changes over the next five years (starting this October 1):

• Cuts interest rates on subsidized student loans in half, from 6.8 percent to 3.4 percent.

• Increases the maximum Pell grant by $1,090

• Forgives debts for students who work in the public sector for ten years

• Caps payments at 15 percent of discretionary income

• Reduces the “special allowance payment” – the obsolete and unnecessary (forgive me) incentive the federal government pays banks to lend to students.

The bill has many provisions that students have been asking for and banks have been fighting against. Many Republicans who voted to cut grants and increase interest rates in the 109th Congress have changed their positions and voted with the new majority.

The President has promised to veto this bill … though it passed both chambers with veto-proof majorities, and tampering in conference committee might give him room to agree.

This is one of the first, direct challenges of the new Congress to the president. If he vetoes it, he’s really on his own. If he signs it, it might give the new majority the gumption to challenge him on other issues.

The President's Delusions

Robert Borosage — Wed, 24 Jan 2007 11:16:31 -0500

Last night's State of the Union address revealed that the state of this president is still delusional. He can't level with the American people because he can't or won't recognize the reality that we face.

The best part of the speech wasn't anything the president said. It was House Speaker Nancy Pelosi sitting over his shoulder, signaling the change that Americans voted for. The president also got a lift from the "ordinary heroes" that he recognized at the end of the speech. But when it got to substance, the president seemed bored with his own words as he trotted out his pledge for more of the same.

For this president, the economy is great and we need to stay the course. The Democratic response by Senator Jim Webb offered a glimpse of the reality that the president doesn't get - that this economy isn't working for most Americans. No wonder less than a third of Americans think the president has any clue about the problems they face.

For this president, we have a strategy for moving forward in Iraq, and we're garnering global support for our foreign policies. Maybe he's back on the sauce - he certainly isn't reading his briefing papers or listening to his own generals. The president called for bipartisanship, apparently not aware that Senators from both parties are already coming together - in bipartisan opposition to the president's escalation of the war in Iraq. Again, Webb offered a dose of reality in his response, stating flatly that it was time to bring the president's war to an end, and that if he couldn't understand that, "we will be showing him the way."

Even where it has dawned on the president that there is a problem to be addressed, his proposals are gestures, if not mockeries. The health care system is broken. The president's reforms, by his own exaggerated numbers, might provide health insurance for maybe 3 million of the 47 million that now go without, while taking a whack at workers who have decent plans (read unions) and public hospitals (read Hillary Clinton's New York which takes 40% of the hit).

Catastrophic climate change and our dependence on foreign oil are a clear and present threat to our security. The president recycles his ethanol enthusiasms (substituting "woodchips" for last year's "switch grass" as a potential source). But his plans won't even cover the projected increase in US oil demand for oil over the next decades. He still defaults on the imperative for a dramatic national drive for energy independence - like that called for by the Apollo Alliance, which can generate jobs even as it helps address global warming.

Our education system is not providing the basics - children with the nutrition and health care to be ready to learn, universal pre-school, smaller classes in the early grades, skilled teachers, affordable college and advanced training. The president offers only to continue the No Child Left Behind reforms that he has failed to fund.

Immigration reform is a vital necessity. The president calls for comprehensive reform, in the face of growing right-wing opposition. But he insists on a guest worker program, simply a subsidy for exploitative employers, insuring them a pool of second class workers.

The president's speech was more striking for what it omitted than for what it contained. No mention of our unsustainable trade deficits, the loss of 17% of our manufacturing jobs, the growing indebtedness to foreign creditors, particularly the Chinese and Japanese central bankers. No talk of the worst corporate crime wave in modern history, with executives cooking the books and plundering their own companies. Not a word about the worst inequality since the Gilded Age, the rise of families in poverty. Obscenely, the president said not a word about the beleaguered survivors of Katrina, who having weathered Katrina's winds, now must struggle to survive the administration's broken promises.

Speaker Pelosi's presence and Senator Webb's response offered the only solace for Americans watching last night. This president remains in his bubble, divorced from a reality he can't see, committed to a course at home and abroad that won't work. But it matters less and less. Americans have already tuned him out, and the Congress no longer dances to his fancies. From now on, it is the new leadership in Congress that "will be showing him the way."