The Bank Lobbyists Behind the Senators Voting "No" on Reconciliation

In a hopeful sign for American college students, the original coalition of Senators that rallied around the student loan industry now appears to be splintering.
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As the Senate takes up health care under the reconciliation process, the fight to block reform continues -- for the banks and their minions in the Senate, at least.

The health care fix-it bill approved by the House on Sunday night includes student loan reform legislation that would end wasteful subsidies to lenders like Sallie Mae, Citigroup, and JP Morgan. The banks are extraneous middlemen in the student loan business, skimming profits by originating government-backed loans and charging high interest rates. The reconciliation bill would eliminate the program that subsidizes these activities and switch to a more efficient and equitable system of direct lending.

Despite the common-sense nature of the reform, Senators Blanche Lincoln and Ben Nelson have decided that they will vote no on the reconciliation bill due to the inclusion of student loan reform legislation. Two weeks ago, they were part of a coalition of six Democratic Senators -- including Mark Warner, Tom Carper, Bill Nelson, and Jim Webb -- that wrote a letter to Senate majority leader Harry Reid raising concerns about the student reform legislation.

Why would these Senators step forward to defend a wasteful, inefficient system that pads bank profits at the expense of college students?

That's the question I attempted to answer in a report released on Tuesday by the Campaign for America's Future, titled "Money-Changers in the Senate: How the Student Loan Industry Enlisted Senators to Fight Reform and Protect Profits."

The report estimates that the industry has spent $15 million fighting the Student Aid and Fiscal Responsibility Act (SAFRA). It details how the banks have mounted a massive political campaign to fight legislative reform and preserve the status quo: billions in profits, company jets, private golf courses -- and predatory interest rates for America's college students.

As part of the campaign, the industry developed a sophisticated political strategy that targeted potential sympathizers in the Senate, including the six Senators who signed the letter to Reid. The industry showered them with campaign contributions and made a number of key lobbying hires in order to open lines of communication with their offices.

Among their hires: Kelly Bingel. Bingel is Senator Blanche Lincoln's former chief of staff and a longtime aide to the Senator. She is lobbying on behalf of an obscure group called the "Student Loan Coalition" and John Dean, a lobbyist for the Consumer Bankers Association. The CBA's membership includes Citigroup, Chase, Wells Fargo, and a number of other large student lenders.

A recent Roll Call article described Bingel as Lincoln's "alter ego."

Student loan lobbyist Kelly Bingel and Sen Blanche Lincoln.

Their ties also extend beyond the professional sphere: Lincoln is the godmother of Bingel's son, according to this interview Bingel gave to her old sorority. Ironically, considering the matter at hand, Senator and lobbyist were brought together by their college ties. Lincoln and Bingel were both members of the same sorority, Chi Omega (at different schools, however).

Lobbyists like Bingel have used their relationships with their old bosses to ensure that the Senate looks out for the student loan industry's agenda, even if it comes at the expense of millions of students.

The industry's other key Democratic defender, Senator Ben Nelson, also has strong ties to the industry through his former legislative director, Amy Tejral. Tejral lobbies for Nelnet, a major lender based in Nelson's home state of Nebraska.

Student loan lobbyist Amy Tejral and Sen Ben Nelson.

At least six student loan lobbyists once worked for the six Senators who rose to the defense of the student loan industry in the letter to Reid.

The report also notes that the industry has used a number of industry associations and shadow groups to fight reform. The Consumer Bankers Association, the Business Roundtable, the American Bankers Association, and the Chamber of Commerce have all lobbied against student loan reform. The groups enlisted lobbyists on behalf of their members, which include Sallie Mae, JP Morgan, Citigroup, and other major lenders.

Even Chamber CEO Tom Donohue got in the act, personally lobbying against SAFRA, according to the business lobby's disclosure reports.

The industry has also funneled tens of thousands of dollars to these Senators. Nelson, for one, is a top recipient of Nelnet cash. The company's PAC has given him $19,000 over the years, and executives Jay and Mike Dunlap gave him $3,000 late last year. Sallie Mae's PAC maxed out to Senator Blanche Lincoln's primary account in 2009. Two of Tom Carper's top three career contributors are JP Morgan and Citigroup, both major lenders, and Sallie Mae's PAC has given him $13,500 over the past ten years.

To get an idea of the firepower behind the industry's campaign, check out the full report.

In a hopeful sign for American college students, the original coalition of Senators that rallied around the student loan industry now appears to be splintering. Ben Nelson and Blanche Lincoln have announced that they will vote no on reconciliation, but Tom Carper, Bill Nelson, and Jim Webb appear to be signaling that they will support the legislation. Mark Warner's stance is still unknown.

When the Democrats first re-gained the Senate majority in 2006, the late Senator Ted Kennedy made student loan reform a major legislative goal, saying that "it's time to throw the money-changers out of the temple of higher education." Despite the student lenders' multi-million dollar campaign to preserve the status quo -- billions in bank profits while college students get stuck with the bill -- the Senate may finally stand up and give the money-changers the boot.

Kevin Connor is a fellow at the Institute for America's Future. A version of this post first appeared at

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