NLS has excellent coverage of the press conference unveiling Chap Petersen's and Donald McEachin's "Student Bill of Rights." As Ben points out, "a few years ago Sallie Mae was converted to a for profit institution and two Virginia State Senators were appointed to serve on their corporate board- Jeannemarie Devolites Davis and Benny Lambert. Sallie Mae has seen its stock price increase almost 2000% (i.e. TWENTY times) in the last 10 years." Which is exactly why we need this Bill of Rights.
Here's the press release:
Petersen Proposes Reform of
Student Loan IndustryToday in Fairfax, Democratic State Senate candidates Chap Petersen (D-Fairfax) and Donald McEachin (D-Henrico) announced plans to reform the student loan industry in Virginia by prohibiting abusive lending practices at Virginia universities.
Petersen and McEachin held a press conference today at the George Mason University campus, which sits in the heart of the 34th State Senate district. Student leaders representing the Mason community surrounded them.
Petersen and McEachin's initiative would do the following:
1. Force student lenders to disclose their "for profit" status to potential borrowers;
2. Prohibit exclusive lending relationships between lenders and institutions;
3. Prohibit predatory collection practices and usurious penalties.In their press conference, McEachin and Petersen focused their remarks on Sallie Mae - a private company making student loans - whose stock price has increased exponentially, while it has been investigated for its abusive lending practices.
Petersen's opponent - State Senator Jeannemarie Devolites-Davis (R) - was appointed to the Board of Sallie Mae by President George W. Bush in 2001 and served as a paid Director for four years. Her Bush appointment and subsequent tenure coincided with some of the worst abusive practices committed by Sallie Mae.
In May 2006, a "Sixty Minutes" report described the extreme penalties and predatory collection practices of Sallie Mae, which caused some students to owe over four times the amount of the original loan.
In March 2007, Attorney General Andrew Cuomo (D-N.Y.) issued a report, which made specific national findings about the "unholy alliance" between lenders and universities, including reports of "kickbacks" to college officials for exclusive access to potential student borrowers.
Thanks to preferential laws passed by U.S. Congress, Sallie Mae is not subject to bankruptcy law or the Fair Debt Collection Act. According to reports, Sallie Mae gave $2.7M in donations to members of Congress between 2002 and 2006, the majority of it made to the previous Republican majority.
"These unethical practices are unacceptable in Virginia," stated Petersen. "Although we couldn't fight Sallie Mae's influence on Capitol Hill when it was given preferential treatment, we can at least ensure that students attending Virginia universities are protected from these abuses."
Petersen is running to represent the 34th State Senate District. He and McEachin, once elected, will take office in January 2008.