Boston Herald: A Victory for Students by Wayne Woodlief

By Wayne Woodlief | Thursday, September 27, 2007 | http://www.bostonherald.com | Columnists

The bill Sen. Edward M. Kennedy (D-Mass.) championed, and President Bush is scheduled to sign today, provides the biggest boost in college student loan aid since the GI Bill that followed World War II. That’s a victory in itself.

It increases Pell Grants by $1,000, raising individual grants to over $5,000. It caps monthly payments on loans from private and public sources at 15 percent. Try to soak students with sky-high rates – as some lenders did – and you’re now breaking the law. Finally, if you’re a firefighter, police officer, teacher, public health worker, member of the military or in several other public service positions, your loans will be forgiven after 10 years.

Yet the new law is but a prelude to other legislation Kennedy helped steer through the Senate and now pending in the House to protect students against shady loan practices that cheated them out of lower-cost loans and drove many deep into debt.

That bill simplifies the often-confusing federal form students must fill out to get a loan. It forces lenders to be crystal clear on their terms.And it lays out a new code of ethics for lenders who were caught cozying up to college aid officials – showering them with gifts, favors and the occasional junkets so they would promote the lenders’ product in return.

The need for new laws on student loans was obvious at hearings during the spring and summer by Kennedy’s Health, Education, Labor and Pensions (HELP) committee, which exposed some of those relationships.

For example, lenders shelled out $2,500 to sponsor a dinner at Sacred Heart University in Fairfield, Conn.; $3,000 to buy tables at a fund-raiser at Atlanta’s Morehouse College; money for a golf outing at Baptist Bible College and Seminary in Clarks Summit, Pa., and $5,000 to Freed-Hardeman University in Henderson, Tenn., to support its intramural sports program.

See a pattern here? These particular colleges are small schools which working-class youngsters are more likely to attend – just the kind of students who could ill afford burdensome and unexpectedly high rates (that darned fine print again) when they go to work.

College officials asked for the donations in many cases. Call it a shakedown, but lending companies, seeing a way to get preferential treatment to hawk their loans, were happy to comply. So what if it cost students a few thousand more dollars than a loan from another, less-touted firm.

A report Kennedy issued accused Sallie Mae, the nation’s largest student lender, of trying to collect debts not actually owed, firing employees who tried to help borrowers and intentionally sending payment bills to incorrect addresses to force borrowers into default. The firm denied all. What a surprise.

Brett Napoli, now a college professor in Sacramento, told Kennedy that Sallie Mae put him into default after he lost his home in a 1994 California earthquake and had to live in a tent center without access to mail – and thus never saw a default notice Sallie Mae sent him. He said the company refused to negotiate with him and insisted he pay up $26,000 right away. Homeless and on aid from the Red Cross, he couldn’t. So now, with interest and fees – and monthly payments still not enough to reduce the principal – he said he owes $72,000. That’s the kind of case Kennedy wants settled right.

This has been a good year for the senator since the 2006 elections put him back in power, achieving benchmarks in the Senate he set for himself. Besides the student loan reform, he said, “We’ve increased the minimum wage, put reforms into place to safeguard the nation’s food and drugs, ensured that those with mental health illnesses are treated the same as those with physical illness and we’re moving forward to expand health care for children” – working for a veto-proof margin in the House and Senate on the latter.

“We’ve made signifcant progress for America’s families and we’re not done yet,” the senator said.

Not done yet. Typical Kennedy. Carry on, Teddy, carry on.

–Jill McCarthy