Lenders Seek Help From AFL-CIO to Protect Student-Loan Subsidies

http://chronicle.com/news/article/2494/lenders-seek-help-from-afl-cio-to-protect-student-loan-subsidies

June 14, 2007
Lenders Seek Help From AFL-CIO to Protect Student-Loan Subsidies

Banks are enlisting an unlikely ally in their fight against cuts in student-loan subsidies under consideration by Congress: labor unions.

In recent days, the Consumer Bankers Association and Nelnet, a leading lender, have faxed personal letters to state affiliates of the AFL-CIO asking them to urge their representatives in Congress to reject the cuts. One letter, sent to affiliates in Indiana and Colorado, warns that the subsidy cuts could reduce the availability of loans, making it harder for families to get the money they need to attend college.

“In today’s world of increasing multilateral business competition, our sons and daughters need a college education, and perhaps an advanced degree, to give them the best chance of a bright future,” the letter begins. “We need to make sure kids know about and get the financial support they need to go to, and get through, college to best help them compete in tomorrow’s world.”

On Monday, Richard L. Trumka, secretary-treasurer of the AFL-CIO, sent a letter to the state affiliates calling the banks’ claims “disingenuous.”

“Contrary to these assertions, the changes under consideration in Congress would have virtually no impact on loan access or affordability,” he wrote. “The changes would provide sufficient funds to keep the direct-loan program running effectively, while limiting the profits banks make on student loans.”

It’s unclear whether any state unions have agreed to endorse the banks’ letter. —Kelly Field