Romney’s Higher Education Plan: A Giveaway To The Wall Street Banks And Predatory Schools That Fund His Campaign

By Pat Garofalo/Think Progress

2012 presumptive presidential nominee Mitt Romneyreleased his higher education plan Wednesday, decrying the nation’s “education crisis.” During a speech before the U.S. Chamber of Commerce, Romney blamed President Obama for rising tuition prices and increasing student debt.

Of course, tuition increases and growing debt are a phenomenon several decades in the making. And Romney’s plan would make the problem decidedly worse in two important ways, giving federal money away to Wall Street banks and predatory for-profit colleges, two industries to which Romney has extensive ties.

First, as he’s promised before, Romney intends to divert money away from student aid — instead giving it away to banks — by repealing Obama’s student loan reforms:

Reverse President Obama’s nationalization of the student loan market and welcome private sector participation in providing information, financing, and the education itself.

President Obama did not nationalize the student loan market. (Plenty of banks still make private sector student loans.) Instead, Obama and the Democrats cut private banks out of the federal student loan program, ending billions in subsidies that were needlessly going to banks for acting as loan middlemen. The money saved went into the Pell Grant program. Romney’s plan would entail taking away Pell money in order to pay Wall Street to service federal loans.

Second, Romney would remove regulations meant to protect students from predatory for-profit colleges:

Ill-advised regulation imposed by the Obama administration, such as the so-called “Gainful Employment” rule, has made it even harder for some providers to operate, while distorting their incentives.

This rule simply states that colleges leaving too many students crippled with debt and without good jobs lose their access to federal dollars. Many for-profit schools make nearly all of their revenue from the federal government — in the form of the various streams of aid used by their students — yet have much high rates of student loan default than public schools. Only 11 percent of higher education students in the country attend for-profit schools, but they account for 26 percent of federal student loans and 44 percent of student loan defaults.

Romney is already intimately tied to the for-profit college industry. Inside Higher Ed noted that two of his advisers “have lobbied on behalf of the Apollo Group, the parent company of the University of Phoenix.” On the campaign trail, Romney has effusively praised Full Sail University, a for-profit institution. And it seems that his policy platform would be a boon to this industry which is, in many instances, extremely predatory.

Conservative Group Club For Growth To Congress: Let Student Loan Rates Double

By Alex Seitz-Wald/Think Progress

The House will vote today on a bill to prevent the interest rate on government-backed student loans from doubling. Both Republicans and Democrats support the extension on the lower rate, but not theClub for Growth, the deep-pocketed political group backed by wealthy conservative donors, especially from the financial sector.

The group put out a “Key Vote Alert” this morning “urg[ing] all House members to vote “NO” on the Interest Rate Reduction Act (HR 4628)” and warning members that their vote may be used against them on the Club’s Congressional Scorecard, which they use to rate members when making considerations about endorsements and independent expenditures.

The Club explains that it thinks the government should not be subsidizing student loans and that the the Affordable Care Act should only be repealed as a whole:

Regardless of the merits, the government should not be in the business of subsidizing student loans. [...] It’s bad policy to subsidize student loans in the first place, but the net result will likely drive up tuition costs for all students, making the overall cost of the bill much higher than its current price tag. House Republicans want to offset this subsidy by repealing the Prevention and Public Health Fund that was created with the passage of ObamaCare. That fund should indeed be repealed, but fiscal conservatives should only try to repeal the entire law, not just parts of it. And for the most part, the offset is irrelevant. Fiscal conservatives should not be promoting bad policy, which this bill contains.

As Education Secretary Arne Duncan has noted, federal tuition assistance has not at all kept upwith tuition increases, so there is little evidence to support the Club’s claim that subsidizing student loans leads to higher tuition costs. Data from Pell Grants also casts doubt on the claim.

The Club has been active in a number key Republican primary elections this year, funding hard-right challengers against mainline conservative incumbents.

UPDATE

The White House has threatened to veto the GOP’s student loan bill over its cuts to the Affordable Care Act, the AP reports.