Sallie Mae spent $640K lobbying Uncle Sam
August 20th, 2008 | by admin |August 19, 2008: 3:02 PM EDT
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WASHINGTON (AP) — Sallie Mae, the nation’s largest student lender, spent $640,000 lobbying in the second quarter for government help to shore up the troubled student loan market and on legislation related to other issues affecting the industry, according to a recent disclosure report.
The company, formally called SLM Corp., lobbied on access to capital for student lenders and a variety of legislation touching on student lending, education spending and banking.
Congress sets the interest rates borrowers pay and the subsidy levels lenders receive under the federal student loan program. Lawmakers last year cut about $20 billion in federal subsidies to lenders to pay for increases in student aid.
That reduction cut into lenders’ profit margins as did the credit crunch in the financial markets, which has made it expensive for lenders to raise the capital they need to offer student loans.
Auction-rate securities collapse hurts lenders
After the credit squeeze intensified for student lenders in mid-February with the collapse of the $330 billion market for auction-rate securities, a number of lenders, Wall Street investors and college administrators pushed for federal help. Sallie Mae warned that it could not lose money indefinitely on federally-guaranteed student loans.
In May, Bush administration officials told lenders that the government would buy up their student loans to ensure the companies have access to capital, following Congress’ enactment of legislation giving the Education Department the authority to do so.
The administration also agreed to have the government invest in securities made of student loans bundled together — traditionally the exclusive province of private investing companies — to make capital available to student lenders at cheaper rates than what they can get by issuing student loan securities on the market.
Besides Congress, Reston, Va.-based Sallie Mae also lobbied the Education Department, White House, Treasury Department and Federal Reserve, according to the report for the April-June quarter filed July 18 with the House clerk’s office.
Among those registered to lobby on behalf of Sallie Mae were: Steve Heyman, a former acting assistant secretary of labor, and Mark Schuermann, formerly chief of staff for former Rep. Harold Ford., D-Tenn. 
