Bad times loom for many New Jersey college students as federal loan interest rates are scheduled to double on July 1 and state aid programs cover less and less of rising higher-education costs.
But yesterday, at least, was a good day for the state’s college students, as efforts to make college more affordable advanced on two fronts.
Students scored a major victory when executives of Sallie Mae, the nation’s largest student-loan financing agency, agreed to meet with representatives of the U.S. Student Association (USSA) lobbying organization to discuss the company’s political activities. The announcement came as USSA representatives from around the country – including about 50 students and faculty from New Jersey -- staged a protest at a shareholder meeting in Newark, DE, against lobbying efforts they say are designed to keep them from getting grants and low-interest loans.
And the nonprofit research group New Jersey Policy Perspective (NJPP) released a report calling on Governor Chris Christie to divert a proposed tax cut of about $1.6 billion to programs to relieve students’ debt burden. The report’s authors expressed hope that their findings would spur Trenton to put a higher priority on helping New Jersey students pay for college.
As Christie and many Republican lawmakers push for about $1.6 billion in tax cuts, Gordon MacInnes, a member of Rutgers University’s powerful Board of Governors and president of NJPP, wrote in yesterday’s report that the state should use that money to make college more accessible.
“Affordability of public higher education is disappearing for many New Jersey families,” he said in a conference call after releasing the report, “Invest in New Jersey: Make Higher Education Affordable Again.”
“We need to reverse disinvestment and stabilize funding for colleges so they can deal with a tremendous increase in enrollment and provide a path for students to get through college in less than six years,” he said.
According to the report, full-time undergraduate enrollment has increased by 55.4 percent since 1996 at the state’s 31 public universities and state and community colleges.
While the average amount for annual tuition and fees at Rutgers, for example, has increased by 237 percent since that year, state operating support for Rutgers has declined by 85 percent during that time, if adjusted for inflation.
On average, the state’s Tuition Aid Grants (TAG) cover only 15 percent of a typical Rutgers recipient’s annual tuition, room, board and fees, though they were created to fund 100 percent of tuition for low-income students. Students lose their TAG eligibility after 10 semesters -- a reality that hits hard for students who are increasingly forced to spread their college careers over more than five years.
The story of Bryan Miranda provides an all-too-common example of the hurdles faced by many New Jersey college students. Miranda was a Rutgers sophomore until the beginning of this past spring semester, when his financial aid package, which fell $4,000 short of the previous year, ran out.
Because he could no longer afford to pay tuition, Rutgers dropped him from its registration rolls; with that loss went his dining plan and dormitory room. Miranda, who mostly lost aid he had received through the Educational Opportunity Fund program for high-achieving low-income students, said he is managing to sit in on few classes with sympathetic professors while he tries to figure out how to earn more money.
“It’s heartbreaking,” he says. “The financial aid office tells me to try to get loans but I can’t because my mom is a bus driver who has no credit because she was undocumented until three years ago. I did very well in high school and I feel I deserve an education.”
Miranda serves as a face for New Jersey students who, without a college degree, may be at a disadvantage in trying to find a place in the state’s highly educated workforce.
Instead of funding $1.6 billion worth of tax cuts for rich residents and corporations, MacInnes said that beginning in fiscal 2015 the governor should apply $325 million to double TAG program funding, $400 million to stabilize operating budgets of research universities and state colleges, and $180 million to establish a blue-ribbon commission of science and business leaders to “reignite New Jersey’s exploration of promising fields for research and development.”
“In other words,” the report continues, “send the message across the nation and around the world that New Jersey is truly back as a capital of enterprise, research and opportunity by investing in the state’s greatest resource: its people.”
Representatives for the governor and Republican caucuses for the Senate and Assembly did not respond to emailed requests for comment.
On the national front, meanwhile, students who requested the Sallie Mae meeting hope the discussions will lead to lending reforms across the country, though they’re starting the talks from an adversarial position.
Last year, 36 USSA students, including three from New Jersey, plus an organization employee, were arrested for trespassing outside Sallie Mae’s political headquarters in Washington, D.C. Yesterday’s protest, held just one day after Sallie Mae named a new CEO, was the second since the arrests -- and the first one to elicit the desired response. Sallie Mae executives are promising Chief Executive Officer Jack Remondi and Executive Vice President Joe DePaulo will try to schedule the meeting within one month. The biggest issue they should expect to discuss? Transparency.
“People should know what the largest owner of private student debt is up to. We as borrowers have a right to know how they’re spending that money politically. They’re giving money to politicians who vote against student interests and we think that’s a conflict of interest,” said Rutgers University senior and USSA member John Connelly, who participated in yesterday’s protest.
The interest rate on subsidized Stafford loans -- loans on which interest is paid by the federal government -- is scheduled to double to 6.8 percent on July 1 if the Senate passes a bill (and President Obama doesn’t veto it ) linking interest rates to the government’s rate of borrowing. The increase would make it more difficult for students to afford those federal loans and possibly push them into borrowing more from the private sector.
USSA students say that scenario benefits Sallie Mae -- which is a private lender, not a government entity -- and its competitors.
“Sallie Mae profits exorbitantly by making students take on more debt than they need at rates that are not necessary,” said Tim Haresign, president of the College Council, which represents 10,000 New Jersey state-school faculty and professional staff, who attended yesterday’s proceedings.
In 2009, Sallie Mae spent $3.48 million in federal lobbying efforts, according to the Washington Post, and waged an unsuccessful fight, through private meetings with members of Congress, town-hall style meetings and petition drives, to block an Obama-backed bill to end federal subsidies for private lenders.
More recently, OpenSecrets.org reports, Sallie Mae’s political action committee directly contributed $110,000 to federal candidates during the 2012 election cycle, with donations split almost evenly between Republicans and Democrats. However, the company is publicly professing to support a Democrat-backed bill to make private student loans forgivable under bankruptcy. Its support of that legislation is a notable exception to the types of policies Heresign says it usually advocates.
“There are lots of instances where Sallie Mae has met with people in Congress to lobby against Pell Grants and different forms of debt relief for students. And they try to play a larger role in getting in on the ground floor in terms of presenting students with alternatives to private borrowing,” Heresign said by cell phone from the middle of the rally.
However, Sallie Mae has won numerous national awards for its corporate ethics, stakeholder responsiveness and programs for needy families. And spokesperson Patricia Christel says the Fortune 500 corporation conducts its lobbying activities in compliance with all applicable laws and regulations.
“Most recently, we have focused efforts to increase flexibility to customers experiencing hardship and provide the option to rehabilitate and repair credit following a private loan default,” she said.
But those efforts aren’t enough for Heresign, who notes that on the state level, Sallie Mae lobbies to reduce public investment in higher education, which forces students into its higher-interest private loans.