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This Week in Poverty: Taking On Sallie Mae and the Cost of Education | The Nation

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Greg Kaufmann

Poverty in America: people, politics and policy.

This Week in Poverty: Taking On Sallie Mae and the Cost of Education


Photo via Greg Kaufmann.

An update appears below.

Nearly 200 students, parents, community members and union leaders rallied at Sallie Mae’s annual shareholder meeting in Newark, Delaware, yesterday. On the agenda: first, demand that the nation’s largest private student loan lender meet directly with students to discuss their crushing debt burden; and second, introduce a shareholder resolution calling for disclosure of the corporation’s lobbying practices and membership in groups such as the American Legislative Exchange Council (ALEC).

Outside of Sallie Mae’s corporate headquarters, the activists were met by “dozens of police, blockades and K-9 units,” according to participants. Sarita Gupta, executive director of Jobs with Justice–American Rights at Work, urged the crowd to confront Sallie Mae executives and board members “about their role in America’s student debt crisis.”

More than 38 million people now owe over $1.1 trillion in student debt; Sallie Mae owns approximately 15 percent of that debt, or $162.5 billion. Students owe an average of $27,000 when they graduate from college and many have a debt load several times greater than that amount. Nearly one in ten will default on their loans within two years.

Gupta noted that Sallie Mae “spent $16 million on federal lobbying from 2008 to 2012 and has more than sixty state lobbyists.” The corporation has lobbied at the federal level “to block student loan reform,” and at the state level “for reduced public investment in higher education, forcing more students to rely on private student loans.”

“They’re in the business of condemning students to a lifetime of debt, not making education a reality,” said Sara Fitouri, a law student at the University of Denver, who owes $145,000 in student debt.

“They show that when we privatize something that used to be in the public realm it can lead to horrible results,” said Sam Nelson, a junior at George Washington University who expects to graduate with approximately $50,000 in student loan debt.

Sallie Mae was indeed created as a government-sponsored enterprise in 1972, and transitioned to a fully privatized bank lender between 1997 and 2004. Organizers say that as the largest lender it now sets the trends and standards for the industry.

Gupta spoke out against profit margins that continue to increase for Sallie Mae as “student debt and student loan defaults escalate at an unsustainable pace.” She noted that the senior management team of five executives made more than $20 million combined in 2011; the former CEO—who just announced his retirement—was paid $35 million from 2007 to 2011.

Twenty of the activists entered Sallie Mae headquarters as legal proxies for shareholders with a right to vote. The groups they represented included: the United States Student Association, the Student Labor Action Project, Common Cause, the Responsible Endowment Coalition, the American Federation of Teachers (AFT) and Jobs with Justice–American Rights at Work. Sallie Mae personnel attempted to restrict these individuals to a holding area but the activists successfully negotiated their way into the meeting.

Prior to introducing the shareholders resolution, Randi Weingarten, president of the AFT, whose members’ pension plans have more than $1 trillion in assets and are long-term shareholders of Sallie Mae, said, “As Sallie Mae profits from billions of dollars of student loans, it has an obligation to students, educators and shareholders to be transparent about its lobbying efforts, including on student loan reform.”

The resolution asked that the board disclose in an annual report the corporation’s policies, procedures and payments for direct and indirect lobbying; as well as its membership and payments to any tax-exempt organization “that writes and endorses model legislation.” (See: ALEC.) Although there has yet to be a tally of the vote, organizers hope that they received the support of approximately 30 percent of the shareholders.

Following the vote, the students won a long-fought-for victory: newly named Sallie Mae CEO Jack Remondi agreed to their demand to meet next month. His predecessor had been steadfast in his refusal to allow the students a seat at the table.

“We are going to work hard and be ready to give him a run for his money,” said Nelson. “We’ll get a lot of no’s, but if we organize enough we might get a few yes’s. Ultimately though, what’s going to bring the pressure to [get] the change we need is what’s worked in the past for other issues—organizing, direct action and taking the fight to them in their own backyard.”

The promise of privatization of the student loan industry was that there would be greater efficiency and therefore more opportunities for students to pay for college and thrive. That is clearly not what Sallie Mae and the big banks have delivered to students like Sam, Sara and their families—not to mention the millions of young people who are priced out of college.

“After we win this campaign against Sallie Mae, we are not going to stop until student debt is a thing of the past,” said Nelson. “We fundamentally believe that education is a right and it should be free and accessible to all people who wish to pursue it. We know that free education has worked in the past, and that the government and companies are choosing not to do it—and to fight against it—for their own political or profit-motivated reasons.”

UPDATE: The resolution has received over 35 percent of shareholder votes. (Importantly, this figure understates support for the resolution, as there were a large number of abstentions counted as no votes.) Student organizers say that they are very pleased with this result.

Another Great Infographic From Demos: On Student Debt


Click to enlarge

Losing Hope in Detroit

Cross-posted from my new weekly column on the impact of sequestration at BillMoyers.com.

Jobs. They are supposedly the foremost concern of every Democrat and every Republican, and they are certainly the greatest concern for the 20 percent of American workers who are unemployed or underemployed, and the millions of people who have dropped out of the labor force altogether.

But you wouldn’t know it from Congress’s lack of urgency to confront and end $85 billion in across-the-board sequester cuts this year, despite the fact that these cuts are already reducing employment and shrinking gross domestic product, and straining state budgets as a loss of federal grants makes it more difficult to fund vital services.

Even the very programs designed to prepare the American workforce for high demand jobs—another congressional favorite, at least rhetorically—are being squeezed.

Since 1968, Focus: HOPE has served the people of Detroit and its suburbs through career training, neighborhood revitalization and fighting hunger. The training programs have placed nearly 12,000 at-risk men and women in family-supporting careers, including machining, advanced manufacturing, information technology and engineering.

But according to Steve Ragan, chief development and external relations officer at Focus: HOPE, just as employers are ready to hire again in the Detroit metropolitan area, sequestration is limiting the organization’s ability to help those looking for work.

“We’re often contracting with regional or local Michigan workforce agencies, and they are very conscious of the impact of sequestration on their budgets, so it’s really slowed down funding at a time that is critical,” Ragan told me. “We’ve been waiting to see people hiring for a long time—now we have employers interested in hiring our students, a waiting list of people who want job training, but we can’t fund the programs as we have in the past.”

Ragan said that the information technology programs are being hit particularly hard, and the “Earn and Learn” program—focusing on jobs for at-risk minority youth and adults who have been incarcerated or are chronically unemployed—is expected to be discontinued. To date, Focus: HOPE is 35 percent behind budgeted revenue for workforce development, or approximately $800,000. The average job training cost per student is $5,000—though it varies greatly from program to program—which means that the organization is down 160 funded spots through two-thirds of its fiscal year. Ragan said at the current pace 250 to 350 students will miss out on job training and “the impact on personal lives and families is devastating.”

“Our capacity used to be limited not by money but by getting the students who could commit to the academic rigor of our programs,” said Ragan. “Now we are capped by money and it’s often a month-to-month challenge.”

These cuts are a serious blow to a community that is struggling. According to the Economic Policy Institute, the unemployment rate of African-Americans in Michigan is 18.7 percent, about two and a half times that of whites (7.5 percent) as it has been for much of the last five years. The national black unemployment rate is 14 percent, and of the twenty-four states with large enough African-American populations to track with federal Current Population Survey data, Michigan has the highest African-American unemployment rate.

Most Focus: HOPE students come from the Detroit public school system and many have what Ragan described as “very serious foundational education problems.”

“In recent months, we had a student with a high school diploma who was reading at a first grade level,” said Ragan. “We see lots of students with third, fifth or sixth grade reading and math levels—so our first task is usually bringing them up to a seventh or eighth grade level so they are prepared to study in our career training programs.”

Ragan said Focus: HOPE takes great pride in “maintaining a job placement rate in at least the high seventies for our graduates—and committing to lifetime assistance with job placement.” The organization also provides scholarships for graduates who want to pursue a bachelor’s or associate’s degree.

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“We have partnerships with most of the universities in the area that have engineering and technology programs,” said Ragan.

Ragan emphasized that sequestration is the latest chapter in a “persistent reduction” of public investment in skilled job training that is “especially difficult in a struggling community like Detroit.”

“It’s been a huge mistake,” he said. “This is an investment in our economic recovery, but we are spreading reduced money among more people in need. We’ve become a victim of hyperbole and the political battle.”

Online Actions

Tell Congress: Support the Half in Ten Act of 2013—Make Poverty Reduction a Priority

Deutsche Bank: Keep the Biggs Family in Their Home

Tell Congress: Take a stand against hunger in the Farm Bill

Publix: Join the Fair Food Program

Disability Programs—Taxes Matter

12 Things You Can Do to Fight Poverty

Action

Palermo Workers Union March from Milwaukee to Mequon (Saturday, June 1, 8 am–8  pm, 35th Street Bridge, Milwaukee). A year ago the owners of Palermo’s Pizza, brothers Angelo and Giacomo Fallucca, fired nearly 100 workers who came together to improve working conditions at the factory and to form the Palermo Workers Union (PWU). For the past year, the PWU and community allies have worked to get the Falluccas to meet with the workers, but they have refused. Now the workers will try to meet the Fallucas at their doorstep. For more information, click here.

Other Events

A Bold Approach to the Jobs Emergency (Tuesday, June 4, 8:30am–4 pm, 20 F Street NW Conference Center, Washington, DC.) We have a US jobs emergency. More than 11 million Americans are still out of work, and the austerity push is only making matters worse. States have been forced to implement deep cuts to emergency unemployment benefits even though almost 40 percent of the unemployed have been jobless for more than six months. This conference features great panels—with great people—on how to create good jobs and raise labor standards. Among the participants: Dean Baker, Maya Wiley, Ellen Bravo, Sarah Bloom Raskin, Nona Willis Aronowitz, Dorian Warren, Annette Bernhardt, Ai-Jen Poo, Gar Alperovitz, Joseph Geevarghese, Madeline Janis and Deepak Bhargava. Presented by the Roosevelt Institute. Register here.

2013 Mississippi on the Potomac Reception (Tuesday, June 4, 6:30 pm–8:30 pm, AFL-CIO, 815 16th Street, NW, Washington, DC.) The event marks the tenth anniversary of the Mississippi Center for Justice, a not-for-profit public interest legal organization that works against the odds to provide legal assistance to some of the most vulnerable and neglected communities in Mississippi, the poorest state in the country. For more information about the reception, contact Lauren Welford at 601-709-0859 or lwelford@mscenterforjustice.org, or click here to sponsor the event or purchase individual tickets.

Webinar: Why Community Colleges Should Care about Obamacare (Wednesday, June 19, 2–3:30 pm EDT.) “Obamacare” will expand health coverage to millions of Americans, including students. New forms of coverage are already available to many students, and millions more will be eligible for free or affordable health coverage starting in 2014. Please join the Center for Law and Social Policy (CLASP) for a webinar and conversation with Enroll America and Young Invincibles, two leading organizations raising awareness about the potential impact of Obamacare on community college students across the country. Register here.

Audio Conference: Where You Live Matters—Addressing Concentrated Poverty Neighborhoods (Tuesday, June 25, 3–4 pm EDT.) “Location, location, location” has implications beyond real estate. For example, location influences test scores and health outcomes for children. In his just-released book, Stuck in Place: Urban Neighborhoods and the End of Progress toward Racial Equality, Patrick Starkey, associate professor of sociology at New York University, explores and explains why mobility is often an American myth for children who grow up in concentrated poverty neighborhoods, and how place-based disadvantages can be passed on from one generation to the next. Starkey reveals that 72 percent of black families living in concentrated poverty neighborhoods in the 1970’s are still living in similar neighborhoods some forty years later.
Join Spotlight on Poverty and Opportunity, along with PRRAC, the Furman Center and the Urban Institute for a national audio conference featuring a discussion with Patrick Starkey about his new research and potential solutions for an urban antipoverty agenda. RSVP here.

Building Adult Capabilities to Improve Child Outcomes: A Theory of Change (from Harvard Center on the Developing Child/Frontiers of Innovation)

Clips and other resources (compiled with James Cersonsky)

Fighting Childhood Poverty,” American Pediatric Association Task Force on Childhood Poverty

The Death and Life of Chicago,” Ben Austen

Student Debt Is a Women’s Issue,” Sheila Bapat

Group Calls Sheriff Joe Arpaio’s Actions ‘Abusive Authority,’” Jacques Billeaud

The Cost of Cutting SNAP,” Center for Hunger-Free Communities

How do we solve poverty? Honor thy mother,” Mariana Chilton

The case for food stamps,” Christopher D. Cook

Disabled Are New Target for Charges of Cheating: NYT, NPR lead campaign to cut SSI,” Neil deMause

Fast Food Workers Striking in Seattle,” Josh Eidelson

Walmart Workers Launch First-Ever ‘Prolonged Strikes,’” Josh Eidelson

pment (not kids),” Leslie T. Fenwick

Ongoing joblessness: A national catastrophe for African American and Latino workers,” Mary Gable

Ark. Families Fight Anti-Rural Bias—Through Action,” Lavina Grandon

Homeowners protest banks they say are illegally stealing their homes,” Melissa Harris-Perry [VIDEO]

Why won’t Publix join effort to help Florida’s farmworkers?” Lani Havens

Poverty as a Childhood Disease,” Perri Klass, M.D.

Disability, Social Security, and the missing context,” Trudy Lieberman

,” Ylan Mui

OSHA files eight violations against Palermo’s pizza firm,” Georgia Pabst

Treating the disease of child poverty,” Susan Popkin

The sequester, poverty and politics,” Radio Times with Marty Moss-Coane [AUDIO]

When Black Kids Want to Learn and the World Tells Them ‘No,’” Mychal Denzel Smith

The California Secure Choice Retirement Savings Program,” Aleta Sprague

From Chicago to LA, Students Mass for Racial Justice,” StudentNation

Good News and Serious Challenges in Brookings Report on Suburban Poverty,” Philip Tegeler

What do current federal funding levels in the wake of sequestration mean for state budgets?” Rebecca Thiess

Suburban poverty: let’s keep talking about it,” Margery Turner

Good Consumers, Bad Citizens,” Michael Winship

Studies/Briefs (summaries written by James Cersonsky)

The Facts on Social Security Disability Insurance and Supplemental Security Income for Workers with Disabilities,” Shawn Fremstad and Rebecca Vallas, Center for American Progress. Nearly one of every six working-age Americans, or 29.5 million people, has a disability. Some 12 million of this population receives Social Security Disability Insurance or Supplemental Security Income. This report breaks down the benefits of these programs and the issues that people with disabilities face in receiving them. For nonelderly adults, for example, nearly half of beneficiaries take in at least 90 percent of their income from Disability Insurance; for those receiving Supplemental Security, the average benefit is $525 per month, and most have no other source of income. To receive these benefits, however, people face a variety of barriers—which are higher in the US than almost all other countries in the OECD, and worsened by funding shortfalls for both programs. For example, workers need medical evidence from a licensed doctor or medical specialist, must wait five months before they can qualify and must have worked at least a quarter of their adult lifetime—and at least five of ten years before the onset of the disability. Between 2006 and 2008, only about 40 percent of applicants for Disability Insurance were approved. The report’s recommendations include increasing the allowed asset limit for Supplemental Security beneficiaries; reducing the share of earnings that those who return to work are required to put back into the system; simplifying work incentives for those receiving benefits; supporting benefits counseling; and strengthening administrative funding for the Social Security Administration so that benefits are processed faster.

Bridging the Higher Education Divide,” key findings from the Century Foundation Report on Community Colleges. American community colleges enroll 11 million students, or 45 percent of the entire college population. This report reveals shocking figures on racial and class-based separation in college access and funding. Between 1982 and 2006, the share of community college students from the bottom two income quartiles grew, while the other two shrank, leaving a nearly 2 to 1 ratio of those in the lowest bracket to those in the highest. Between 1994 and 2006, the white share of community college students went from 73 to 58 percent, while the combined black and Latino share went from 21 to 33. These race-based figures partly reflect an increasingly diverse population—but relatively stable populations for what the report defines as “the most selective schools” suggest a more complicated story. Over the same period, the white population at these schools dropped only from 78 to 75 percent, while the black and Latino share squeaked from 11 to 12 percent. The most selective schools also have a whopping class bias: 70 percent of students come from the highest income quartile, fourteen times more than those from the lowest quartile. Funding disparities between community colleges—which require the most money per pupil, in part because students who attend them start the farthest behind—and other types of schools tell an even thornier story. Between 1999 and 2009, public research university budgets went up $4,000 per pupil; community college budgets went up only $1 per pupil. How to begin remedying these issues? The report proposes a slate of policies, including: adequate funding floors for community college students based on per pupil costs; tying higher education funding to students with the greatest needs; creating hybrid two- and four-year institutions; and requiring selective four-year colleges to accept more transfer students from community colleges.

Ongoing Joblessness in Mississippi,” Mary Gable, Economic Policy Institute. As part of a series of briefs on racial disparities in unemployment in different states, this report utilizes Bureau of Labor Statistics data to depict the recession’s uneven toll on blacks and whites in Mississippi, the poorest state per capita. In the fourth quarter of 2012, Mississippi’s unemployment rate was 8.7, compared to a 7.8 nationally. For the state’s black population, unemployment was more than double that of whites—14.3 and 5.4 percent, respectively. The disparity reached its high point in the first quarter of 2010, when the black rate (19.8 percent) was more than triple the white rate (5.9 percent).

Vital Statistics

US poverty (less than $17,916 for a family of three): 46.2 million people, 15.1 percent.

Children in poverty: 16.1 million, 22 percent of all children, including 39 percent of African-American children and 34 percent of Latino children. Poorest age group in country.

Deep poverty (less than $11,510 for a family of four): 20.4 million people, 1 in 15 Americans, including more than 15 million women and children.

People who would have been in poverty if not for Social Security, 2011: 67.6 million (program kept 21.4 million people out of poverty).

People in the US experiencing poverty by age 65: Roughly half.

Gender gap, 2011: Women 34 percent more likely to be poor than men.

Gender gap, 2010: Women 29 percent more likely to be poor than men.

Twice the poverty level (less than $46,042 for a family of four): 106 million people, more than 1 in 3 Americans.

Jobs in the US paying less than $34,000 a year: 50 percent.

Jobs in the US paying below the poverty line for a family of four, less than $23,000 annually: 25 percent.

Poverty-level wages, 2011: 28 percent of workers.

Percentage of individuals and family members in poverty who either worked or lived with a working family member, 2011: 57 percent.

Families receiving cash assistance, 1996: 68 for every 100 families living in poverty.

Families receiving cash assistance, 2010: 27 for every 100 families living in poverty.

Impact of public policy, 2010: without government assistance, poverty would have been twice as high—nearly 30 percent of population.

Percentage of entitlement benefits going to elderly, disabled, or working households: over 90 percent.

Number of homeless children in US public schools: 1,065,794.

Annual cost of child poverty nationwide: $550 billion.

Federal expenditures on home ownership mortgage deductions, 2012: $131 billion.

Federal funding for low-income housing assistance programs, 2012: less than $50 billion.

Quote of the Week

“Toxic stress is the heavy hand of early poverty, scripting a child’s life not in the Horatio Alger scenario of determination and drive, but in the patterns of disappointment and deprivation that shape a life of limitations.”
      —Perri Klass, MD, from “Poverty as a Childhood Disease

James Cersonsky wrote the “Studies/Briefs” and co-wrote the “Clips and other resources” sections in this blog.

This Week in Poverty posts here on Friday mornings, and again at Moyers & Company and AlterNet. You can e-mail me at WeekInPoverty@me.com and follow me on Twitter.

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