Sallie Mae, the student loan giant, has had no shortage of work lately. It has spent $125,500 on campaign contributions, at least $3,052,000 this year on lobbying and at least a quarter- million more on advertising against a bill in Congress, the Student Aid and Fiscal Responsibility Act (SAFRA), which would cut wasteful government subsidies to student loan companies. The $87 billion this saves would be invested in education programs, like grants for low- and middle-income students, and deficit reduction. The bill, championed in the House by Education and Labor Committee chair George Miller, follows the outlines of a proposal pushed by President Obama earlier this year. A comparable Senate bill is in the works but has yet to be introduced.
Lately, Sallie Mae executives have been paying visits to Capitol Hill to make their case against SAFRA, claiming it will mean thousands of jobs lost. They are even bringing workers from their call centers on these visits to argue that their jobs should be spared. This activity seems to be having an impact on certain members of Congress, who, with the unemployment rate being in the double digits, are sensitive to the idea of losing any more jobs in their state or district.
Every person’s job is important. There is no minimizing the loss of a job and its impact on a family, especially during the current jobless recovery.
But there is something objectionable about a company manipulating data and its own workers to preserve the corporate welfare on which it has long thrived. According to Sallie Mae’s own numbers, even if SAFRA becomes law and the subsidized Family Federal Educational Loan (FFEL) program is abolished, the company may actually end next year with nearly the same number of employees in the United States as it has now, and possibly even more.
In a recent article in the Chronicle of Higher Education, Sallie Mae representatives claim that the company will lose 30 percent of its workforce should SAFRA pass. The company employs about 8,500 people, according to the report, but it is in the process of bringing back 3,400 jobs from overseas. These 3,400 jobs are returning, at least in part, so that the company can be eligible for Department of Education contracts to service Direct Loans, federal loans made directly to students from the Department of Education under a program created in 1993. If SAFRA passes, these direct loans will replace the current system of subsidized middlemen.
If SLM has 8,500 US jobs, then a 30 percent cut that includes 3,400 returning jobs means:
-170 US jobs
If the 30 percent cut does not include 3,400 returning jobs, that would mean:
+850 US jobs
If SLM has 8,500 jobs globally, then a 30 percent percent cut that includes 3,400 returning jobs means:
+850 US jobs
If the 30 percent cut does not include the jobs returning to the US, that would mean:
+1,870 US Jobs
I spoke with a Sallie Mae representative to figure out whether the 8,500 jobs mentioned include overseas jobs, and whether the 30 percent cut in the workforce includes the 3,400 jobs being brought back to the United States. I did not get a response; but after doing the math for each possible interpretation, one can easily see that the numbers would mean 170 net US jobs lost under the worst interpretation, and 1,870 US jobs gained under the best (assuming that the 3,400 being brought back to the United States represents all overseas jobs). However one chooses to interpret these numbers, the company’s claim that there will be a major loss of US-based jobs seem exaggerated at best.